Couple Say Phony CIA Op Took $12 Million

ALEXANDRIA, Va. (CN) - A married couple claim a man conned them into investing $12.5 million into a bogus company, then treated their money as "gift from God" for his own "personal purposes." James Smith Jr. claimed to be a former CIA op, a graduate of Harvard Law, a director of Blackwater, and said his company, SCG International, had $50 million in government contracts, but "all of these statements are false, except for the fact that defendant Smith owns SCG," according to the federal complaint.

Plaintiffs Craig and Mary Jo Sanford say they made a bundle by selling their medical waste business, and were looking for somewhere to invest. They claim that Smith, of Virginia Beach, told them that he had "numerous diplomatic ties overseas," and that "SCG had a unique ability to invest funds overseas and bring a guaranteed annual return of 10 percent on the principal."

So the Sanfords say they ponied up $12.5 million.

Eventually, the Sanfords say, they asked for their money back, and after "pressing SCG," the company's attorney told them that their money "'had been lost in the stock market.' No more details were given."

The complaint continues: "In the fall of 2009, the Sanfords undertook an investigation into the finances of defendant SCG and defendant Smith. During that time, they discovered concealed facts about defendant Smith and Troy Titus, who is serving federal prison time for investment fraud. Titus was an officer of defendant SCG where he worked directly for Smith.

"According to grand jury transcripts obtained by the Sanfords, Titus acknowledged defendant Smith's obtaining of $12.5 million in 2007 from the Sanfords as a 'gift from God' which could be used for the personal purposes of Smith and SCG.

"Upon information and belief, defendant Smith and defendant SCG never intended to set up an 'investment account' for the Sanfords. Nor did they invest the Sanford' money in an 'ongoing commercial enterprise.'

"Upon information and belief, the Sanfords' money was utilized for purchasing properties and investment opportunities for defendant Smith personally, including several properties under a 'lease-purchase' arrangement which effectively conceals the ownership interest of defendant Smith and/or SCG. Indeed, there is no evidence that defendant Smith and defendant SCG ever set up an investment account of any type for the Sanfords."

The Sanfords want their money back, and punitive damages for fraud, conversion and unjust enrichment.

They are represented by Chapman Peterson with Surovell, Markle, Isaacs & Levy of Fairfax, Va.

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