A Colorado man has been sentenced to 12 years in community corrections after pleading guilty to third-degree felony securities fraud, following an elaborate scheme in which he defrauded investors out of more than $3.7 million.
Tra Jay Scarlett, 55, was sentenced after admitting to a fraudulent investment operation that misled approximately 34 investors. Scarlett’s scheme involved convincing individuals to invest in his company, ‘GO ECO Manufacturing, Inc.’, which was falsely portrayed as a business providing ecological packaging and bottling services.
The scheme, run through another business called ‘Chatfield PCS, Ltd.’, operated from February 2016 to January 2021. Scarlett promised investors annual returns of 15-20%, claiming that ‘GO ECO’ had lucrative “strategic partnerships” with drink manufacturers and commercial clients. However, it was later revealed that ‘GO ECO’ never provided any actual services, never generated revenue, and never had any legitimate business dealings with these companies.
“Investment fraud can destroy entire families and futures,” said Colorado Attorney General Phil Weiser. “Holding fraudsters accountable for this type of serious financial theft is key to protecting the public and preventing similar crimes from happening down the road.”
Scarlett used a combination of tactics to convince his investors that the operation was legitimate. He falsified financial statements, fabricated contracts with sports drink companies, and diverted funds for personal expenses instead of investing them in the company. Over the course of five years, Scarlett sold fraudulent securities to investors, omitting key risks and misleading them about the potential returns on their investments.
As part of his sentencing, Scarlett has been ordered to pay over $3.6 million in restitution to the victims of his scheme. The restitution is intended to help recover some of the funds lost by the defrauded investors.
The case was filed under case number 22CR3654 in El Paso County District Court.
Attorney General Weiser’s office has emphasized that this case serves as a warning to both potential investors and those seeking to perpetrate fraudulent schemes. “This sentence is a step toward holding financial criminals accountable and protecting the interests of Colorado’s residents,” Weiser said.
In addition to this, the SEC filed a complaint charging Scarlett, Chatfield, and GO ECO with violating various antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Without admitting or denying the SEC’s allegations, the defendants consented to the entry of a judgment that permanently enjoins them from violating the charged provisions, imposes conduct-based injunctions, and orders payment on a joint and several basis of $3,217,568 in disgorgement together with prejudgment interest of $407,695. The judgment also orders Scarlett individually to pay a $1.5 million civil penalty.
