Danville man sentenced for pyramid scheme

By BERNARD BAKER
Danville Register & Bee
Published: March 28, 2008

A Danville man who used a pyramid scheme to defraud people out of $17 million will spend the next 37 months in federal prison.

U.S. District Judge William M. Nickerson sentenced 61-year-old Joseph Poteat on Thursday to more than three years in prison, as well as three years of supervised probation after his release for conspiracy to commit mail fraud and conspiracy to commit money laundering in connection with a fraudulent investment scheme. The sentencing took place in Baltimore.

Poteat’s co-defendant, Marie Bellamy, 70, of Baltimore, has received 18 months probation with the first six months to be served in home detention with electronic monitoring after filing a false tax return. Bellamy was ordered to pay restitution of $56,768 to the IRS.

“Money laundering and tax evasion are not victimless crimes,” Don Fort, acting special agent in charge of the Internal Revenue Service’s Criminal Investigation Division, said Thursday.  “Not only are innocent people ‘duped’ by various schemes, but the underground untaxed economy harms the entire nation’s economic strength.

“Honest, hardworking Americans pay the price when others choose to evade their tax obligations.”

Nickerson held off on deciding how much restitution Poteat should pay until he gets more information about the victims’ losses, according to Marcy Murphy, public affairs specialist for the U.S. Attorney’s Office in Baltimore.

The restitution order should be filed in about 90 days, she said.

Poteat led a “private membership organization” known as the CEP Group and JLR Development Ltd., out of Danville, authorities said.

He told investors that JLR was a way to invest in offshore ventures. However, people had to first join another group called CEP, which had an $80 membership fee, Murphy said.

People he recruited throughout the U.S. to join CEP were giving misleading statements to investors regarding how their JLR portfolio would work and the guaranteed return, Murphy said.

Investors got monthly and quarterly statements with false information about how much they were earning, she said.

Authorities said investors lost about $7 million in all.

Poteat urged investors to become “mentors” in JLR. This program let them recruit new members and supposedly get a percentage of the earnings from the investors they recruited.

Maryland U.S. Attorney Rod J. Rosenstein said Poteat and his co-conspirators received roughly $17 million from 1999-2001. Poteat and his family members also received about $700,000 from investor funds.

Rosenstein said Poteat was able to keep the fraud scheme going by providing investors with funds deposited by investors he recruited later.

Contact Bernard Baker at or (434) 791-7986.