Oct. 27—SOUTH BEND — An Elkhart man allegedly conned at least four people out of hundreds of thousands of dollars through investment scams over several years.
And he may have also plotted to have some of his victims killed, according to court documents.
Charles Ray Smith, 50, faces a count of federal wire fraud. He was arrested last Thursday while the case was filed in federal court in South Bend as part of an FBI investigation.
The case details accusations that Smith talked four people into making large investments over about 12 years, convincing them to buy into an apparently bogus company, but never providing returns on the investment. Smith also allegedly posed as two investors and would have victims communicate with these personas via text about the investments, according to the charging affidavit.
An FBI agent noted in the affidavit further allegations that Smith apparently lied to investigators, intimidated two of the victims, and, according to a source in the document, arranged to kill the other two victims while believing they'd wronged him.
The case also stems in part from a civil lawsuit filed against in Elkhart County in June 2019 and led to a nearly half-a-million dollar judgment against Smith about five months later.
A timeline laid out in the affidavit shows the first victim paid Smith $6,000 to invest in a cancer drug through a group in the fall of 2009 with an alleged promise of a significant return in a few years.
The victim then confronted Smith a few years later, and Smith claimed the investment had grown to $6.7 million, but the investment was now with a business called Chicago Investment Group. Smith then allegedly put the victim in touch with a contact named "Barry Barnes," who only communicated via text. After the victim was ghosted by "Barnes," Smith allegedly claimed a contact named "Terry" had taken over for "Barnes. The victim then texted with "Terry" until that communication ceased.
Years later, in 2020, the victim contacted Smith about Chicago Investment Group, which led to Smith allegedly threatening the victim if they had "messed things up" for "Barnes," according to the affidavit.
Meanwhile, Smith had allegedly taken two checks, totaling $100,000, from the second victim to invest in Chicago Investment Group in February 2017. Investigators, according to the affidavit, learned the funds were deposited into banks account and weren't invested into the group.
The third victim was also convinced to invest thousands of dollars in the group in August 2018. The victim was put into contact with "Barnes," who again allegedly only communicated via text, had assured the investment would return millions of dollars, and eventually ghosted the victim, according to the affidavit.
Similar to the second victim, funds were deposited into a bank account, but apparently weren't invested. Money was also allegedly withdrawn from the account to purchase a house in Elkhart, the affidavit shows.
The second victim and another plaintiff sued Smith in a civil tort lawsuit in June 2019. The complaint in that case details multiple allegations of theft over about 13 pages. A judge ruled against Smith in an agreement that November, and ordered him to repay the victim nearly $473,000. The federal affidavit shows by September 2020, Smith had the victim $70,000 with the rest of the order still outstanding.
In an interview with federal investigators in November 2019, Smith allegedly denied knowing "Barnes" or being involved with Chicago Investment Group. Smith also claimed the second and third victims invented the group in order to rip him off. He later went into a description of the group, saying the people involved flip houses and cars for profit but he wasn't involved, according to the affidavit.
The agent noted an investigation found no trace of a Chicago Investment Group in operation or that is legitimately investing money.
The affidavit also refers to a confidential source who alleged Smith knew two of the victims had spoken to investigators, that they had wronged him, and he had made arrangements to have them and other adversaries killed, according to the affidavit.
Smith allegedly talked the fourth victim into investing $6,000 into commercial property in July 2020, and then put the victim in contact with "Terry." Like the others, the victim only texted with "Terry." After receiving no return on the investment, the victim confronted Smith, and Smith allegedly yelled at and intimidated the victim, the affidavit shows.
None of the victims had received returns on their investments, according to the document.
During the investigation, the FBI interviewed a person affiliated with Smith in May 2020, and that person denied having discussions with Smith about investments. Yet, last January, the person was interviewed again after they had an apparent falling out with Smith, according to the affidavit.
The person alleged to investigators how Smith had purchased a mobile phone from Walmart for "Barnes," asked the person to set it up with a Chicago area code, and also asked the person to pay for the minutes so that his information wouldn't be connected to the phone, the affidavit shows.
The person also provided investigators with the number that was believed to be one Smith allegedly used to text as "Barnes." Then during their falling out — which came after the person learned how the first victim, a friend, was allegedly scammed by Smith — the person claimed to have taken a phone from Smith and turned it over to investigators, according to the affidavit.
Agents searched it through a warrant and found the number matched one that had allegedly been used by "Terry," the affidavit shows.
The agent in the affidavit pointed out the wire fraud count comes from how money from one of the victims was transferred from one bank to another, with both of them headquartered outside Indiana.
Smith appeared for an initial hearing in federal court in South Bend Monday. A preliminary hearing then took place Tuesday, according to court information.
Aimee Ambrose can be reached at aimee.ambrose@goshennews.com or 574-533-2151, ext. 240316. Follow her on Twitter at @aambrose_TGN.
