The Despicable Story of Vernon Matthews and His Defrauding of Military Personnel and Their Dependents

They are our nation’s heroes—often risking their lives abroad to protect us at home. Which makes what one Virginia con man did all the more despicable…defrauding military personnel and their dependents in an investment fraud scheme. But one of his victims came forward and filed a complaint. And after a joint investigation conducted by the Richmond offices of the FBI and the U.S. Postal Inspection Service (USPIS)—under the auspices of the Virginia Financial and Securities Fraud Task Force—Vernon Matthews was charged in the scheme, pled guilty, and was recently sentenced to a federal prison term.

Matthews operated a company called First Capital Group (FCG), located in Virginia Beach. He had a license to sell insurance, not to give investment advice or handle securities—but that didn’t stop him from doing so. Starting in 2010 and continuing until early 2013, Matthews solicited members of the military and their families to make investments with FCG.

Often times, he set up booths at establishments known to be frequented by the military—like restaurants located near military bases—and offered promotions, like a free night at a hotel. And when potential victims came to his office to claim the prizes, Matthews would pitch them on an investment. And he lied through his teeth while doing it. Among Matthews’ misrepresentations:

• He received compensation from the U.S. government for his investment advice and services (he did not);
• He would invest his clients’ funds in certificates of deposits, mutual funds, or something similar (Matthews misappropriated all the funds for his own personal or business use);
• FCG was affiliated with several reputable investment companies and funds (it was not);
• The investment provided a good return—anywhere from 4 to 300 percent—and was low-risk or no-risk (it did not and was not).

In one particular instance, a U.S. Naval Academy graduate who invested $20,000 with FCG tried withdrawing funds. Matthews mailed a check that bounced. After being notified about it, he mailed another one…and instructed the victim not to deposit the check until he could put the funds into his account. That, of course, never happened.

Matthews received more than $235,600 from victim investors. Only a few of his victims were able to recover any money, so at his sentencing, the judge ordered Matthews to repay the outstanding balance of $204,465 in restitution to his victims.

The Bureau joined the investigation in April 2013. In July 2013—after an extensive review of financial records, documents, and e-mails, along with interviews of dozens of victims and other witnesses—Matthews was arrested.

The Virginia Financial and Securities Fraud Task Force was initially launched in 2010 to establish a partnership between criminal investigators—including the FBI and the USPIS—and civil regulators to investigate and prosecute complex financial fraud cases in Virginia. The state task force is also an investigative arm of the national Financial Fraud Enforcement Task Force, an interagency group created to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. And while law enforcement, civil regulators, and prosecutors are doing all they can to address financial crimes, you should educate yourself and your loved ones on how to avoid becoming a victim of financial fraud.