David Copeland Reed, a founder of OSGold Ponzi scheme was arrested

On Tuesday this week U.S. authorities arrested David Copeland Reed, 38, who was accused of running a multimillion-dollar Ponzi scheme he founded known as OSGold as reported in court-documents. About seven years ago his operation was shut down and he himself escaped to Mexico with users’ money.

Reed was incriminated to conspiracy, money laundering and wire fraud. He faces a sentence of 40 years in jail. Reed’s business where investors were told their deposits were backed by offshore gold bullion reserves operated from March 2001 until June 2002, when he moved from North Carolina to Cancun, Mexico, taking customer funds with him. Investors and depositors never got their funds back. No gold bullion reserves ever existed.

The authorities arrested Reed in Columbia, South Carolina, where he moved recently.

In a move to attract customers Reed made his business look legal and reputable as it is reported in the documents of prosecutors. Once depositors opened a new account they were supposedly able to send their OSGold money around the world and make payments for the items over the internet. In addition clients were also offered to put money in a high-yielding investment program known as OSOpps under which they were promised to gain a guaranteed return of their principal as well as soaring rates of return. These returns were said to come from gains on foreign exchange trading, but neither Reed nor his associates did any such trades.

66,000 accounts were opened by clients worldwide with Reed’s Ponzi scheme OSGold with at least $12.8 million transferred to three bank accounts that he and his associates controlled.