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Corona Woman Who Ran High-End Denim Jean Company Sentenced to nearly Seven Years in Prison in $15 Million Bank Fraud Scheme

Posted by Fay Arfa | Dec 08, 2015 | 0 Comments

LOS ANGELES– A Corona woman who was the chief executive officer of a high-end jean company that outfitted Hollywood celebrities was sentenced today to 79 months in federal prison for running what prosecutors called “two fraud schemes of epic proportions.”

Carolyn Marie Jones, 52, was sentenced this afternoon by United States District Judge Michael W. Fitzgerald, who also ordered the defendant to pay $15,124,100 in restitution to individual investors and Union Bank of California.

At today's sentencing hearing, Judge Fitzgerald said the defendant was “truly a greedy, awful person.”

Jones pleaded guilty in February to one count of bank fraud and one count of concealing assets in a bankruptcy proceeding.

Jones “executed not one, but two, fraud schemes of epic proportions resulting in a loss to Union Bank and numerous investors of $15,124,100,” prosecutors wrote in a sentencing memorandum that outlined one scheme involving bank loans and bankruptcy fraud and a second one targeting individual investors that Jones perpetrated while free on bond after being indicted in the bank fraud case.

According to court documents, Jones defrauded Union Bank of California in a scheme related to her company, DDI (sometimes known as Diamond Decisions, Inc.), which sold jeans under the labels Privacywear and PRVCY Premium. Union Bank issued an $8.5 million line of credit – which was later increased to $15 million – to Jones in late 2008, but Jones had filed a fraudulent loan application that used another person's social security number, bogus tax returns that had never been filed with the Internal Revenue Service and false financial statements for DDI that grossly overstated the company's profits.

“For years, defendant [Jones] knowingly submitted false and fabricated tax returns, income statements, accounts receivable reports, and other financial documents to Union Bank,” according to the sentencing memo. “She lied to numerous bank employees about her company's success and sales, among other things. She fabricated fake customers and retail stores purportedly buying her products.”

Jones also admitted in court that the accounting firm she claimed had audited her financial statements was a sham company. Jones confessed she lied to Union Bank employees, including the loan officer.

Jones soon defaulted on the $15 million loan, and Union Bank filed a civil lawsuit against DDI in state court. When the court issued an order authorizing Union Bank to seize the company's assets, Jones filed a Chapter 11 bankruptcy petition in February 2010 that listed the bank as the sole creditor. In the following months, Jones lied to the bankruptcy trustee, concealed DDI assets, specifically about $120,000 that she had received from DDI customers, and spent some of the money on herself.

“Jones operated a sophisticated and devious scheme that spanned many years and caused significant financial and personal harm,” said United States Attorney Eileen M. Decker. “Jones actions were driven by greed, caused losses to both a financial institution and individuals, and has now resulted in a significant prison sentence.”

As part of a plea agreement in this case, Jones apologized to the identity theft victim in the bank fraud case, and she agreed to pay $15 million in restitution to Union Bank and $124,100 in restitution to victims whom she admitted defrauding in the second scheme.

Jones pleaded guilty in relation to two cases that were the result of an investigation conducted by the United States Secret Service and IRS – Criminal Investigation. The United States Trustee's Office provided valuable assistance during the investigation.

USAO – California, Central Updated December 7, 2015

Central District of California DOJ / 15-147 / December 7, 2015

About the Author

Fay Arfa

Fay Arfa has the distinction of being Certified as a Specialist in two separate areas of law – Criminal Law as well as Appellate Law – by the California State Bar, Board of Specialization. The National Board of Trial Advocacy has also awarded her a board Certification in Criminal Trial Advocacy. ...


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