Georgia Man Convicted of Counterfeit Gold Scam Appeals to 11th Circuit 

ATLANTA (CN) – A Georgia man sentenced to more than 15 years in prison for scamming internet customers out of nearly $800,000 in a scheme involving counterfeit gold and silver coins asked an 11th Circuit panel Tuesday to reconsider his sentence.

Stacy Paul Waddell was sentenced to serve 183 months in prison for wire fraud, selling counterfeit coins and tampering with official proceedings. He was convicted in August 2016 of duping customers who wanted to purchase gold and silver bullion coins and using their money to gamble in casinos, and he was ordered to make restitution payments to more than 30 victims amounting to $841,000.

Kevin Golembiewski of Berney & Sang, an attorney representing Waddell, told the three-judge panel Tuesday morning that the government failed to establish all the elements of wire fraud at trial and argued that a U.S. Secret Service search of a website operated by his client was illegal because Waddell did not personally consent to the search.

An attorney for the government meanwhile urged the panel to uphold Waddell’s sentence.

“Waddell’s scheme was never to let a sucker off the hook,” Assistant U.S. Attorney James Stuchell said.

According to court documents, Waddell operated several companies that placed advertisements on Craigslist, Amazon and other websites offering to sell precious metals, including gold and silver, at deeply discounted rates.

Waddell promised customers that the gold and silver could be delivered quickly to get them to immediately wire transfer money into bank accounts he controlled.

He used the money to gamble in Hard Rock Casinos in Florida and purchase expensive clothes. He never delivered the promised shipments to his victims.

Waddell also sold counterfeit gold coins to at least one victim and, after he was indicted and arrested, asked an acquaintance to destroy counterfeit coins he hid in the trunk of his car.

On Tuesday, Golembiewski argued that resentencing Waddell would be “appropriate” due to the allegedly improper search of a website owned and operated by his client through which customers could place orders for precious metals.

“Waddell had a possessory interest in that website. He was the CEO, he had the right to exclude people from [using] the website and he generated some of the files in the back end of the website,” Golembiewski said.

“But the site was owned by the corporation, not him,” U.S. Circuit Judge Stanley Marcus responded. “It was owned by the corporation for the benefit of the corporation. Everything generated on it was corporate information. So I’m having difficulty seeing a reasonable expectation of privacy that everyone would respect.” 

“Before computers, this information would’ve been in [Waddell’s] desk drawer. He still would’ve had a possessory interest in it since he had the ability to control the information,” Golembiewski said.

In his rebuttal, Stuchell told the panel that Waddell had no special privacy interest in the website.

“When one of his victims ordered gold, he didn’t try to keep it private,” Stuchell said, pointing out that Waddell had shared his website administrator privileges and login information with another person who also functioned as an administrator for the site.

“The corporation owned all the property, not Waddell,” Stuchell continued. “This isn’t physical data and the website wasn’t a physical residence. The Secret Service search was legal because [the admin] had the ability and authority to consent. [The admin] and Waddell had the same authority to access the website.”

Marcus, a Ronald Reagan appointee, was joined on the panel by Senior U.S. Circuit Judge Julie Carnes, a Barack Obama appointee, and Senior U.S. Circuit Judge Paul Kelly, Jr., sitting by designation from the 10th Circuit.

The judges did not indicate when they will reach a decision in the case.

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