The Case of William Lamar Rhew III: A Legal Analysis of a Multimillion-Dollar Ponzi Scheme and Financial Fraud

Executive Summary

This report provides a comprehensive analysis of the criminal enterprise orchestrated by William Lamar Rhew, III, culminating in his guilty plea on May 6, 2025, to charges of wire fraud, money laundering, securities fraud, tax evasion, and failure to file a tax return. Operating through his company, Chadley Capital, LLC, Rhew executed a sophisticated Ponzi scheme from November 2017 to December 2023, defrauding at least 117 investors of a minimum of $24 million, with some reports indicating the figure could exceed $28 million from approximately 130 investors. The scheme was predicated on false representations of investing in discounted accounts receivable, promising consistently high returns that were, in reality, non-existent. Instead, investor funds were misappropriated for Rhew’s personal enrichment—funding a lavish lifestyle that included a boat, a beach house, and luxury vehicles—and to make lulling payments to earlier investors, a hallmark of Ponzi structures.  

The financial devastation extended to the U.S. Treasury, with Rhew admitting to willfully failing to report nearly $9 million in income to the Internal Revenue Service (IRS) between 2018 and 2022. As part of his plea agreement, Rhew has consented to pay restitution totaling $14,868,815.67 to his victims and $3,056,936 to the IRS. This case is a significant example of how seemingly complex investment narratives can be employed to deceive investors and highlights the critical role of multi-agency collaboration in dismantling such fraudulent operations. The investigation involved the Internal Revenue Service-Criminal Investigation (IRS-CI), the Federal Bureau of Investigation (FBI), and the North Carolina State Bureau of Investigation (NC SBI), with prosecution handled by the U.S. Attorney’s Office for the Middle District of North Carolina.  

Parallel to the criminal proceedings, the Securities and Exchange Commission (SEC) initiated a civil action against Rhew, alleging violations of federal securities laws and seeking remedies including disgorgement and permanent injunctions. Furthermore, Chadley Capital, LLC, became the subject of involuntary bankruptcy proceedings, during which Rhew was found in contempt for failing to cooperate with the appointed trustee. Rhew faces a maximum sentence of twenty years in prison, with sentencing scheduled before United States District Judge Thomas D. Schroeder on August 22, 2025. The case underscores the pervasive threat of investment fraud and the extensive legal and societal repercussions that follow such elaborate deceptions.  

Introduction: The Anatomy of a Multimillion-Dollar Deception

On May 6, 2025, in Winston-Salem, North Carolina, William Lamar Rhew, III, of Summerfield, entered a guilty plea, marking a significant development in a case of extensive financial fraud. The plea encompassed a range of serious federal offenses: wire fraud, money laundering, securities fraud, tax evasion, and failure to file tax returns. These charges stemmed from Rhew’s operation of an elaborate Ponzi scheme, nominally valued at $20 million, through his company, Chadley Capital, LLC. Over a period spanning from November 2017 to December 2023, Rhew successfully defrauded a substantial number of investors, with court documents indicating at least 117 individuals lost a collective sum of at least $24 million.  

The objective of this report is to conduct a thorough legal and financial analysis of Rhew’s fraudulent activities, the operational mechanics of Chadley Capital, LLC, the ensuing legal consequences for Rhew, and the broader implications for financial market integrity and investor protection. The scheme’s longevity, lasting over six years, points to a considerable degree of sophistication in its execution and a sustained effort to maintain an illusion of legitimacy. This prolonged operation suggests that Rhew was adept at inducing investor confidence and potentially evading early detection by regulatory bodies or the victims themselves. The timeline of events, from the scheme’s inception to the legal repercussions, provides a critical framework for understanding the progression of this complex fraud.

Table 1: Key Dates and Developments in the Rhew Case

The Architect and His Vehicle: William Lamar Rhew III and Chadley Capital, LLC

A. Profile of William Lamar Rhew III

William Lamar Rhew III, a resident of Summerfield, North Carolina, stands as the central figure and architect of the multimillion-dollar Ponzi scheme. As the owner and controller of Chadley Capital, LLC, Rhew was directly implicated in orchestrating the fraudulent enterprise, personally inducing victims to invest under false pretenses. While comprehensive biographical details beyond his operational role in the fraud are not extensively covered in the available public records, his actions demonstrate a calculated approach to deception. The ability to persuade at least 117 individuals, and potentially up to 130 according to SEC filings , to part with substantial sums of money suggests Rhew may have effectively exploited pre-existing relationships, cultivated an image of financial acumen, or possessed a charismatic demeanor. This aligns with observations from law enforcement, such as Acting U.S. Attorney Randall S. Galyon’s statement that perpetrators often “exploit people who know and trust them”. Such personal influence is a common characteristic among individuals who successfully operate large-scale Ponzi schemes, as they rely on building a foundation of trust to overcome investor skepticism.  

B. Chadley Capital, LLC: Formation, Representations, and SEC Filings

Chadley Capital, LLC served as the primary corporate vehicle through which William Rhew III executed his fraudulent scheme. Incorporated in Delaware in 2017, the company listed its principal business activity under “Other Banking & Financial Services” in its Form D filed with the Securities and Exchange Commission (SEC) on July 19, 2018. This filing identified “Bill Rhew” as an Executive Officer and Managing Partner. The choice of Delaware for incorporation is a common practice for legitimate businesses due to its well-established corporate legal framework; however, the ease of formation and certain administrative features can also be attractive, though not exclusively, to entities designed for less than transparent operations.  

The Form D indicated that Chadley Capital, LLC was offering “Debt” securities with a minimum investment threshold of $1,000 per investor, claiming an exemption from registration under Rule 506(b) of Regulation D. Critically, the filing stated that the “First Sale Yet to Occur” was as of July 2018. This assertion directly contradicts information from both the Department of Justice (DOJ) and the SEC, which place the commencement of Rhew’s fraudulent scheme in November 2017. This discrepancy is a significant indicator of deceptive intent from an early stage, suggesting either a deliberate misrepresentation to the SEC to obscure prior unregistered securities sales or an attempt to retroactively create a veneer of regulatory compliance for an already operational scheme. Such an inconsistency points to an early willingness to mislead not only investors but also regulatory authorities.  

Rule 506(b) allows issuers to raise an unlimited amount of money from accredited investors and a limited number of non-accredited investors, provided the latter are sophisticated and receive specific disclosures, and crucially, prohibits general solicitation or advertising. Given that Rhew defrauded “at least 117 investors” , a number that grew to “approximately 130” in SEC reports , and considering the nature of his “inducements” and the broad, aggressive, and false promises of high returns, it is highly probable that the actual offering did not comply with the stringent requirements of the Rule 506(b) exemption. The subsequent securities fraud charges brought by the SEC further substantiate the non-compliant nature of these offerings.  

Through Chadley Capital, Rhew propagated a series of elaborate falsehoods to entice investment. He claimed the company specialized in purchasing accounts receivable at a discount and reselling them for a profit, thereby generating substantial returns for investors. To bolster this narrative, Rhew made audacious claims in offering materials, including asserting “$300 million in transactions in 2023,” “consistent returns in excess of 20% per year,” and “nearly 74% total growth over 24 months”. These representations, as confirmed by court documents, were entirely fictitious.  

Unraveling the Ponzi Scheme: Modus Operandi and Financial Impact

A. The Accounts Receivable Factoring Facade

The core of William Rhew III’s fraudulent operation revolved around a deceptive narrative concerning investments in accounts receivable. Rhew induced victims by claiming that Chadley Capital, LLC would “buy accounts receivable at a discount, sell them for a profit, and provide consistently high rates of return on investment”. Similarly, the SEC’s complaint detailed that Rhew offered notes promising significant returns from “purported private investments in manufacturing debts”. This facade was designed to leverage the legitimacy of accounts receivable factoring, a common financial practice where businesses sell their outstanding invoices to a third party (a factor) at a discount to improve cash flow. The factor then collects the full amount from the debtor, earning a profit on the difference.  

Rhew’s choice of this particular investment strategy was likely deliberate. Accounts receivable factoring, while a genuine financial tool, operates in a somewhat specialized market. Its intricacies may not be widely understood by the general investing public, creating an information asymmetry that Rhew could exploit. By presenting an investment supposedly backed by tangible assets (invoices), he could project an image of security and low risk, while the perceived complexity could deter investors from conducting thorough independent verification of his claims. This allowed him to make exaggerated assertions about profitability and risk that were difficult for investors to challenge without specific industry knowledge. However, all representations made by Rhew regarding Chadley Capital’s engagement in such activities were false; the company did not legitimately invest funds as promised.  

The scheme Rhew operated shares some conceptual similarities with traditional factoring fraud, where a business might present fictitious or inflated invoices to a factoring company to obtain funding. However, Rhew’s deception was broader: instead of defrauding a factoring company with specific fake invoices, he defrauded individual investors by fabricating an entire investment program centered around the concept of investing in these debts, without any actual underlying transactions. This targeted investors directly, using the accounts receivable narrative as a sophisticated lure.  

B. Misrepresentations and Investor Inducement

To attract and retain investors, William Rhew III employed a barrage of specific and highly misleading representations. Beyond the general premise of profiting from accounts receivable, he touted Chadley Capital’s purported “increasing deal flow and underwriting standards”. Offering materials disseminated by Rhew made extravagant claims, such as “$300 million in transactions in 2023,” “consistent returns in excess of 20% per year,” and “nearly 74% total growth over 24 months”. The SEC’s investigation further revealed that Rhew offered notes with “guaranteed annual returns of up to 48 percent”.  

These claims, characterized by their specificity and extraordinary performance metrics, were engineered to create an overwhelming impression of a uniquely successful and reliable investment opportunity. The promised returns, ranging from 20% to as high as 48% annually, significantly outpaced typical market yields, a classic enticement in Ponzi schemes. The assertion of “guaranteed” returns is, in itself, a major red flag in the world of legitimate investments, where risk is an inherent component.  

To perpetuate the fraud and prevent premature discovery, Rhew provided investors with “fictitious account statements reflecting profits and increased asset values”. These falsified documents served to validate the bogus claims of high returns, lulling existing investors into a false sense of security and often encouraging further investment or positive word-of-mouth referrals. The use of formal-sounding “offering materials” and financial instruments termed “Subordinated Debt Offerings” lent a superficial layer of legitimacy to the solicitations, potentially deceiving even investors who believed they were exercising a degree of caution. This structured approach to deception indicates a calculated effort to mimic genuine investment processes, thereby disarming investor skepticism.  

C. Scale of Fraud: Investor Losses and Illicit Gains

The financial magnitude of Rhew’s Ponzi scheme was substantial, resulting in significant losses for a large number of individuals and a considerable tax deficit for the government. According to the Department of Justice, Rhew defrauded “at least 117 investors of at least $24 million”. The Ponzi scheme itself was referred to as a “$20 million” operation in the plea announcement. Concurrently, the SEC’s civil complaint alleged that Rhew raised “over $28 million from approximately 130 investors”.  

These slight variations in the total defrauded amounts and investor counts between the DOJ’s criminal case and the SEC’s civil action are not unusual. They can arise from different calculation methodologies, evidentiary standards (proof “beyond a reasonable doubt” in criminal cases versus a “preponderance of the evidence” in civil matters), or the evolving scope of investigations as more information or victims come to light. Regardless of these minor discrepancies, the overarching conclusion is that Rhew orchestrated a massive fraud amounting to tens of millions of dollars.

Beyond the direct harm to investors, Rhew also engaged in significant tax fraud. For the tax years 2018 through 2022, he “willfully failed to report nearly 9millioninincometotheInternalRevenueService”.[1]Thissubstantialsumofunreportedincome,derivedfromthePonzischeme,demonstratesasystematicefforttoconcealtheillicitproceedsfromtaxauthorities,addinganotherlayerofcriminalitytohisactions.Italsoindicatesthattheschemewasgeneratingconsiderablepersonal”income”forRhewduringtheseyears,fundedbythecontinuousinfluxofnewinvestormoney.∗∗Table2:FinancialOverviewoftheRhewFraudScheme∗∗∣FinancialAspect∣Amount() | Source(s) | | :————————————————— | :————————————— | :———— | | Total Amount Defrauded from Investors | $24 million to over $28 million | | | Number of Investors | At least 117 to approximately 130 | | | Stated Ponzi Scheme Value (DOJ) | $20 million | | | Unreported Income to IRS (Tax Years 2018-2022) | Nearly $9 million | | | Agreed Restitution to Victims (Plea Agreement) | $14,868,815.67 | | | Agreed Restitution to IRS (Plea Agreement) | $3,056,936 | |  

D. Misappropriation of Funds: Lifestyle and Lulling Payments

Contrary to his representations of investing in accounts receivable, William Rhew III systematically diverted investor funds for personal enrichment and to sustain the Ponzi scheme. A significant portion of the money was channeled into “his personal expenses including the purchases of a boat, a beach house, and luxury cars”. The SEC’s complaint provided further details, citing expenditures on “flights on a private jet, a waterfront home, a Mercedes automobile, and a pleasure boat”. This pattern of acquiring conspicuous luxury assets is a common trait among Ponzi schemers. Such displays of wealth serve not only for personal gratification but can also function as a deceptive tool to project an image of immense financial success, thereby reassuring existing investors and attracting new ones who aspire to similar affluence.  

In addition to personal luxuries, Rhew used investor funds to cover “the operating expenses of a now-bankrupt, unrelated retail business that he owned and controlled” , identified as Spartan Safe. This diversion of capital from Chadley Capital investors to support a separate, failing venture is a clear breach of fiduciary duty and constitutes further fraud. It suggests Rhew was attempting to use the Ponzi scheme as a source of liquidity to cover losses elsewhere, a desperate measure that often deepens the financial hole and compounds the criminality.  

Crucially, a portion of the incoming investor money was used to make “‘interest’ and ‘withdrawal’ payments to other victim-investors as part of the Ponzi scheme”. These “lulling payments” are the operational linchpin of any Ponzi structure. They create the illusion of legitimate investment returns, satisfying early investors or those who request withdrawals, thereby preventing the scheme from collapsing prematurely. These payments also generate false positive testimonials, as “successful” investors unwittingly encourage others to participate, perpetuating the cycle of fraud until the inflow of new money can no longer sustain the outflow of promised returns and operational costs.  

The Tangled Web of Criminal Charges: A Legal Dissection

William Lamar Rhew III’s guilty plea encompassed five distinct federal charges: wire fraud, money laundering, securities fraud, tax evasion, and failure to file a tax return. This array of charges reflects the multifaceted nature of his criminal enterprise, where the core financial deception was inextricably linked with efforts to conceal and personally benefit from the illicit proceeds, as well as to defraud the U.S. government of tax revenue. The interconnectedness of these offenses allowed federal prosecutors to construct a comprehensive case, leading to admissions of guilt on multiple fronts. The successful prosecution on such a broad range of charges underscores the thoroughness of the multi-agency investigation.  

The inclusion of both tax evasion, a felony under 26 U.S.C. § 7201, and failure to file a tax return, typically a misdemeanor under 26 U.S.C. § 7203 (unless specific aggravating conditions apply), indicates the prosecution’s intent to hold Rhew accountable for various degrees of culpability concerning his tax obligations. Tax evasion involves a willful attempt to defeat the assessment or payment of tax, often requiring an affirmative act of concealment, such as Rhew’s failure to report nearly $9 million in income. Failure to file, on the other hand, addresses the willful neglect of the legal duty to submit a tax return when one is due.  

Table 3: Summary of Charges Against William Lamar Rhew III

A. Wire Fraud (18 U.S.C. § 1343)

Wire fraud, codified at 18 U.S.C. § 1343, is a federal crime that involves devising or intending to devise a scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, and transmitting or causing to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice. In Rhew’s case, the Ponzi scheme itself constituted the “scheme to defraud.” He utilized various forms of electronic communication—likely including emails to solicit investors, website representations for Chadley Capital (if any existed), and electronic fund transfers to receive investor money and make lulling payments—all of which would have crossed state lines, thus satisfying the interstate wire communication element. The dissemination of false offering materials and fictitious account statements via electronic means further supports this charge. A conviction for wire fraud carries a maximum penalty of 20 years in prison and significant fines, which can be increased if the fraud affects a financial institution or involves a presidentially declared major disaster or emergency, though these latter conditions do not appear applicable here.  

B. Money Laundering (e.g., 18 U.S.C. § 1956/1957)

Money laundering generally involves engaging in financial transactions with the proceeds of specified unlawful activities (SUAs), knowing that the property involved represents the proceeds of some form of unlawful activity. The statutes, such as 18 U.S.C. § 1956, criminalize conducting or attempting to conduct a financial transaction involving these proceeds with the intent to promote the carrying on of the SUA, or with knowledge that the transaction is designed to conceal or disguise the nature, location, source, ownership, or control of the proceeds. The wire fraud and securities fraud committed by Rhew qualify as SUAs. His use of the fraudulently obtained investor funds to purchase luxury personal assets (boat, beach house, luxury cars, private jet travel), to fund his unrelated retail business (Spartan Safe), and, critically, to make lulling payments to earlier investors to perpetuate the Ponzi scheme, all constitute financial transactions designed to promote the ongoing fraud or to conceal the illicit origin of the funds by converting them into other assets or using them in seemingly legitimate ways. Money laundering convictions typically carry maximum penalties of up to 20 years imprisonment per count, substantial fines, and the mandatory forfeiture of assets involved in or traceable to the offense.  

C. Securities Fraud (e.g., 18 U.S.C. § 1348; Sec. Act §17(a); Exch. Act §10(b))

Securities fraud encompasses deceptive practices in connection with the offer, purchase, or sale of securities. Key elements generally include a material misrepresentation or omission of fact, scienter (a wrongful state of mind, or intent to deceive, manipulate, or defraud), a connection with the purchase or sale of a security, reliance thereon, economic loss, and loss causation. Rhew, through Chadley Capital, LLC, offered and sold investment instruments described as “notes” or “Subordinated Debt Offerings”. These instruments, which promised returns based on the purported managerial efforts of Rhew and Chadley Capital in accounts receivable or manufacturing debt investments, would likely be classified as securities under federal law (e.g., under the Howey test or as notes qualifying as securities). Rhew’s conduct squarely meets the elements of securities fraud: he made material misrepresentations (e.g., claims of $300 million in transactions, guaranteed returns up to 48%, nearly 74% growth) and omissions (failure to disclose that Chadley Capital was not making legitimate investments and was, in fact, a Ponzi scheme). He acted with scienter, as evidenced by the elaborate deception and creation of fictitious account statements. These actions were directly connected to the sale of Chadley Capital’s notes to investors, who relied on these falsehoods and suffered significant economic loss. Penalties for securities fraud can be severe, including imprisonment for up to 20 or 25 years depending on the specific statute violated (e.g., 18 U.S.C. § 1348, or sections of the Securities Exchange Act of 1934) and substantial fines.  

D. Tax Evasion (26 U.S.C. § 7201) and Failure to File Tax Return (26 U.S.C. § 7203)

Tax evasion, under 26 U.S.C. § 7201, is a felony that requires the government to prove three elements: (1) the existence of a tax deficiency (an unpaid tax liability); (2) an affirmative act constituting an evasion or attempted evasion of the tax; and (3) willfulness. Rhew’s admission to willfully failing to report nearly $9 million in income to the IRS for tax years 2018 through 2022 directly supports this charge. This unreported income, derived from his fraudulent scheme, created a significant tax deficiency. The act of intentionally not reporting this income on his tax returns constitutes an affirmative act of evasion. The willfulness element is satisfied by the intentional violation of a known legal duty to report all income. Tax evasion carries a maximum penalty of five years in prison, a fine of up to $100,000 for individuals (or $250,000 under general criminal fine statutes), and the costs of prosecution.  

Failure to file a tax return, under 26 U.S.C. § 7203, is generally a misdemeanor. It requires proof that: (1) the defendant was a person required by law to file a return for the taxable year(s) in question; (2) the defendant failed to file such a return at the time required by law; and (3) the failure to file was willful. Rhew’s failure to report nearly $9 million in income implies he also failed to file accurate returns, or potentially any returns at all, for the tax years 2018 through 2022, despite having a clear obligation to do so given the substantial income. The penalty for this misdemeanor is imprisonment for not more than one year, a fine of not more than $25,000 for individuals, or both, plus prosecution costs. The inclusion of this charge alongside tax evasion covers the distinct offense of not submitting the required filings, separate from the active attempt to evade the tax due.  

Regulatory Scrutiny and Corporate Demise

A. The Securities and Exchange Commission Civil Action (Litigation Release No. 26129)

Parallel to the criminal investigation and prosecution, the U.S. Securities and Exchange Commission (SEC) initiated a civil enforcement action against William Rhew III and Chadley Capital, LLC. The SEC filed its complaint in the United States District Court for the Middle District of North Carolina on September 23, 2024, under Case No. 1:24-cv-00771. This action underscores the dual-track approach often employed by governmental authorities in combating complex financial fraud, where criminal penalties are pursued alongside civil remedies aimed at investor protection and market integrity.  

The SEC’s allegations largely mirrored those in the criminal case but provided additional granularity from a securities law perspective. The agency asserted that between November 2017 and December 2023, Rhew, through Chadley Capital, raised over $28 million from approximately 130 investors. This was achieved by offering and selling notes that promised guaranteed annual returns of up to 48 percent, purportedly generated from private investments in manufacturing debts. The SEC contended, like the DOJ, that these investments were fictitious. Instead, investor funds were allegedly used by Rhew to finance a lavish personal lifestyle (including private jet flights, a waterfront home, a Mercedes, and a boat), to make Ponzi payments to existing investors, and to cover operating expenses for an unrelated, now-bankrupt retail business he controlled (Spartan Safe). A key element of the deception highlighted by the SEC was Rhew’s periodic creation and provision to investors of fictitious account statements designed to show non-existent profits and inflated asset values, thereby concealing the fraud and lulling investors.  

The SEC charged Rhew with violating cornerstone anti-fraud provisions of federal securities laws: Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The relief sought by the SEC is comprehensive and typical for such cases, including: a permanent injunction to prevent future violations; disgorgement of all ill-gotten gains with prejudgment interest; the imposition of civil monetary penalties; an accounting of Rhew’s financial activities; a permanent officer-and-director bar, which would prohibit Rhew from serving as an officer or director of any publicly traded company; and an injunction permanently barring Rhew from participating in the issuance, purchase, offer, or sale of any security, except for transactions in his own personal accounts. These remedies are designed not only to penalize past misconduct but, crucially, to strip away fraudulent profits and to prevent Rhew from engaging in similar activities in the future, thereby protecting the integrity of the securities markets and potential future investors.  

B. Chadley Capital, LLC: Involuntary Bankruptcy Proceedings (Case No. 24-10170)

The corporate entity at the center of the fraud, Chadley Capital, LLC, also faced its demise through the legal system. The company became the subject of an involuntary Chapter 7 bankruptcy proceeding in the U.S. Bankruptcy Court for the Middle District of North Carolina (Case No. 24-10170). Reports indicate that Chadley Capital, LLC “recently consented to an involuntary bankruptcy” around the time the SEC’s civil action was announced in September 2024.  

The bankruptcy proceedings revealed further evidence of Rhew’s obstructive behavior. On May 8, 2024, the Bankruptcy Court issued an order finding William Rhew III in civil contempt for his failure to comply with a prior turnover order. This order had directed Rhew to deliver various assets and information to the Chapter 7 trustee appointed to manage the bankruptcy estate. Specifically, Rhew failed to turn over items including “any and all cryptocurrency wallets, hard drives, USB drives, computers, tablets and phones,” as well as “any and all information necessary to take control of these assets”. The court explicitly found that Rhew had “continuously delayed or evaded his responsibility to comply with the Turnover Order and to cooperate with the Trustee in the administration of this case”. As a consequence of his ongoing non-compliance, despite previous sanctions like daily fines, the court threatened Rhew with coercive incarceration by the United States Marshal Service if he did not fully comply.  

Rhew’s conduct in the bankruptcy proceedings, even while facing serious criminal charges and SEC scrutiny, demonstrates a persistent pattern of disregard for legal obligations. This non-cooperation directly impeded the trustee’s efforts to identify, marshal, and liquidate any remaining assets of Chadley Capital for the potential benefit of its creditors, primarily the defrauded investors. The specific mention of “cryptocurrency wallets” in the turnover order is a noteworthy modern element, suggesting that Rhew may have utilized digital currencies to receive, transfer, or conceal a portion of the illicitly obtained funds. This presents an evolving challenge for trustees and law enforcement in tracing and recovering assets in financial fraud cases, as cryptocurrencies can offer a degree of anonymity and ease of transfer that complicates traditional recovery methods. Rhew’s resistance to turning over such assets underscores their potential significance as a repository of victim funds and his determination to obstruct recovery efforts.

The Pursuit of Justice: Investigation and Prosecution

A. Collaborative Investigative Efforts: IRS-CI, FBI, and NC SBI

The successful unraveling of William Lamar Rhew III’s extensive Ponzi scheme and associated financial crimes was the result of a collaborative investigation by federal and state law enforcement agencies. The primary agencies involved were the Internal Revenue Service-Criminal Investigation (IRS-CI), the Federal Bureau of Investigation (FBI), and the North Carolina State Bureau of Investigation (NC SBI). This multi-agency task force approach is crucial for dissecting complex financial frauds like Rhew’s, which often violate a multitude of laws and span various jurisdictions, requiring diverse expertise and resources.  

IRS-CI, as the criminal investigative arm of the IRS, specializes in financial crime investigations, particularly those involving tax fraud, money laundering, and other illicit financial flows. Their expertise in “following the money” and analyzing complex financial records is invaluable in cases where perpetrators attempt to conceal income and evade tax liabilities, as Rhew did with nearly $9 million in unreported income. Special Agent in Charge Donald “Trey” Eakins of the IRS-CI Charlotte Field Office highlighted this dual aspect, stating, “In this case, the defendant not only victimized his investors, but he also defrauded American taxpayers by concealing his income from the IRS and evading his tax liability”.  

The FBI has broad jurisdiction over federal crimes and plays a primary role in investigating complex white-collar crimes, including Ponzi schemes, securities fraud, and wire fraud. The FBI’s investigative techniques often involve sophisticated financial analysis, witness interviews, and the tracing of fraudulent communications and transactions. FBI Charlotte Special Agent in Charge Robert M. DeWitt emphasized the deceptive nature of such schemes and offered a warning to the public: “It’s unlikely fraudsters will be up front and admit they’re taking your money and pumping it into a Ponzi scheme. But there are warning signs: investors should be wary anytime you’re guaranteed high returns with little or no risk”.  

The North Carolina State Bureau of Investigation (NC SBI), particularly its Financial Crimes Investigations Unit, contributes state-level expertise in complex financial crimes such as embezzlement, corporate malfeasance, and fraud impacting North Carolina citizens and businesses. The NC SBI often works in partnership with federal agencies on cases with overlapping jurisdiction. The Director of the NC SBI noted the impact on local victims: “The victims in this case are hardworking men and women, many of whom are small business owners. The Financial Crimes Investigations Unit of the North Carolina State Bureau of Investigation will continue to work diligently to combat fraud against the citizens of our great state”.  

The public statements from the leadership of these agencies serve not only to confirm their roles but also to fulfill a broader public duty: to reassure the community about ongoing enforcement efforts against financial crime, to educate citizens about the warning signs of fraud, and to deter other potential offenders by demonstrating the commitment to pursuing justice.

B. The Role of the U.S. Attorney’s Office, Middle District of North Carolina

The prosecution of William Lamar Rhew III was spearheaded by the U.S. Attorney’s Office for the Middle District of North Carolina. Acting United States Attorney Randall S. Galyon announced the guilty plea, and Assistant U.S. Attorney Laura Jeanne Dildine led the prosecution. The U.S. Attorney’s Office serves as the chief federal law enforcement office in its district, responsible for prosecuting violations of federal law.  

In complex financial fraud cases like Rhew’s, the U.S. Attorney’s Office plays a pivotal role in coordinating the efforts of the various investigative agencies, evaluating the evidence gathered, and making critical decisions regarding the specific charges to be filed. They are responsible for presenting the case to a grand jury for indictment (if not proceeding by information), negotiating plea agreements, and representing the government in all court proceedings, including trial and sentencing. The decision to consolidate multiple offenses—wire fraud, money laundering, securities fraud, tax evasion, and failure to file—under a single federal prosecution streamlines the judicial process and ensures that the full scope of the defendant’s criminal conduct is addressed. Acting U.S. Attorney Galyon’s statement, “We are committed to pursuing justice for victims in these cases but encourage the public to beware of any investment opportunity that sounds too good to be true, no matter who is promoting it,” underscores the office’s commitment to combating economic crime and protecting the public. The involvement of this office signifies the federal government’s serious approach to addressing large-scale financial fraud that harms individuals and undermines the integrity of the financial system.  

Judicial Resolution: Plea, Restitution, and Sentencing Outlook

A. The Guilty Plea Agreement

On May 6, 2025, William Lamar Rhew III formally admitted his culpability by pleading guilty to all five federal charges levied against him: wire fraud, money laundering, securities fraud, tax evasion, and failure to file a tax return. By entering a guilty plea, Rhew waived his constitutional rights to a jury trial, to confront witnesses, and against self-incrimination. Such a plea requires the defendant to affirm the factual basis of the charges, essentially conceding that the prosecution possesses sufficient evidence to prove guilt beyond a reasonable doubt.  

Rhew’s decision to plead guilty to this comprehensive suite of serious felonies strongly suggests that the evidence amassed by the collaborative investigative team was overwhelming, rendering a trial defense perilous and unlikely to succeed. In complex white-collar crime cases, plea agreements are common and typically involve negotiations between the prosecution and the defense. These negotiations can cover various aspects, including the specific charges to which the defendant will plead, the stipulation of facts, and sometimes, though not always binding on the court, recommendations or agreements regarding sentencing. A key component of Rhew’s plea agreement was his consent to pay substantial restitution to both his victims and the IRS.  

B. Mandated Restitution: Victims and the IRS

As a crucial part of his plea agreement, William Rhew III consented to pay significant restitution. He agreed to pay $14,868,815.67 to the victims of his Ponzi scheme and an additional $3,056,936 to the Internal Revenue Service. These figures represent an attempt to compensate for the financial harm caused by his extensive fraudulent activities.  

The agreed-upon restitution of $14.87 million for the victims, while substantial, is notably less than the total amounts Rhew was reported to have defrauded. The Department of Justice indicated investor losses of at least $24 million, while the SEC’s complaint cited over $28 million raised from investors. This disparity, leaving a potential shortfall of approximately $9 million to $13 million, underscores a common and unfortunate reality in large-scale Ponzi schemes: victims rarely achieve full recovery of their lost principal. Funds in such schemes are often dissipated through the perpetrator’s lavish spending (as seen with Rhew’s purchases of a boat, beach house, and luxury cars), used for lulling payments to other investors, or lost in other failed ventures (like Rhew’s bankrupt retail business, Spartan Safe ). Consequently, even with a conviction and a restitution order, the actual amount recovered by victims often depends heavily on the assets that can be located and seized from the defendant, which may be insufficient to cover all losses.  

Similarly, the restitution of $3.06 million to the IRS is less than the “nearly $9 million in income” that Rhew willfully failed to report between 2018 and 2022. This difference does not necessarily imply that the IRS is settling for a fraction of the owed taxes. The $3.06 million likely represents the calculated actual tax liability on the unreported income, plus applicable penalties and interest, as determined by the IRS. The gross unreported income figure ($9 million) is the base upon which tax liability is assessed, not the tax amount itself. The IRS also retains other civil mechanisms to pursue outstanding tax debts.  

C. Sentencing Proceedings: Judge Thomas D. Schroeder and Potential Penalties

The sentencing for William Lamar Rhew III is scheduled to take place on August 22, 2025, at 2:30 p.m. in Winston-Salem, North Carolina. The proceedings will be presided over by United States District Judge Thomas D. Schroeder. As a consequence of his guilty plea, Rhew faces a statutory maximum sentence of twenty years in prison, a period of supervised release of up to three years, and substantial monetary penalties. The 20-year maximum likely corresponds to the most serious charges, such as wire fraud or money laundering, which often carry such statutory ceilings.  

Judge Thomas D. Schroeder, appointed to the federal bench by President George W. Bush in 2007 and having served as Chief Judge for the Middle District of North Carolina from 2017 to 2023, is an experienced jurist. His judicial career includes overseeing complex and high-profile cases, such as the litigation surrounding North Carolina’s voter ID law. This background suggests Judge Schroeder will conduct a meticulous sentencing hearing, thoroughly considering all relevant factors before imposing a sentence.  

While the plea agreement may contain recommendations, the ultimate sentencing decision rests with Judge Schroeder. He will be guided by the Federal Sentencing Guidelines, which provide a framework based on the severity of the offense and the defendant’s criminal history. In Rhew’s case, several aggravating factors are likely to influence the sentence significantly. These include the substantial amount of financial loss inflicted (exceeding $20 million), the large number of victims (over 100), the abuse of a position of trust he cultivated with investors, and the sophisticated means employed to perpetrate and conceal the fraud over an extended period. The duration of the scheme (November 2017 to December 2023) and the multifaceted nature of his criminal conduct will also be weighty considerations. Although a guilty plea and acceptance of responsibility can be considered mitigating factors, in cases of such egregious and large-scale fraud, their impact is often tempered by the severity of the crime. Given these elements, a substantial term of imprisonment for Rhew is a highly probable outcome.

Broader Implications: Lessons in Investor Protection and Due Diligence

A. Red Flags Ignored: Warning Signs Manifested in the Rhew Case

The fraudulent scheme orchestrated by William Lamar Rhew III through Chadley Capital, LLC, exhibited numerous classic red flags typically associated with investment fraud and Ponzi schemes. These warning signs, had they been recognized and heeded by investors, might have averted or at least mitigated the substantial financial losses incurred. One of the most prominent red flags was the promise of “consistently high rates of return” , with the SEC complaint specifying “guaranteed annual returns of up to 48 percent”. Such guarantees, especially at levels far exceeding prevailing market rates, are a hallmark of fraudulent investment offerings, as all legitimate investments carry some degree of risk and do not offer guaranteed outcomes.  

Furthermore, the investment strategy itself—buying accounts receivable at a discount to sell for a profit, or investing in “manufacturing debts”—while sounding plausible, might have appeared overly complex or opaque to the average investor. According to FINRA, investors should be wary of strategies that are not clearly explained or understood. The specialized nature of this purported investment area could have made it difficult for investors to independently verify Rhew’s claims or assess the true risks involved.  

Acting U.S. Attorney Randall S. Galyon’s comment that perpetrators often “exploit people who know and trust them” also points to another potential red flag: the abuse of personal relationships or affinity. While not explicitly detailed, the ability to defraud over a hundred investors often involves leveraging social networks or projecting an image of trustworthiness that bypasses normal due diligence. The persistence of this scheme for over six years, despite these evident warning signs, highlights a continuing challenge in investor education and a potential willingness among some investors to overlook or rationalize away red flags in the pursuit of exceptionally high yields. This underscores the critical need for investors to exercise skepticism and conduct thorough due diligence, particularly when confronted with investment opportunities that sound “too good to be true”.  

B. The Human Toll: Victim Impact and Recovery Challenges

The criminal actions of William Lamar Rhew III inflicted a devastating toll on “at least 117 investors,” a group described by the Director of the NC SBI as “hardworking men and women, many of whom are small business owners”. The impact of such large-scale Ponzi schemes extends far beyond mere financial loss. Victims often experience profound emotional distress, including severe stress, anxiety, insomnia, and depression. Feelings of shame, guilt, and self-blame are common, as victims may fear social condemnation or feel foolish for having been deceived. In some instances, the financial strain and emotional trauma can lead to serious health problems and even family disintegration.  

The targeting of small business owners, as highlighted by the NC SBI, is particularly damaging. These individuals may have invested not only personal savings but also capital essential for their businesses. The loss of such funds can jeopardize their livelihoods, the viability of their enterprises, and the employment of their staff, creating a ripple effect within their local communities. Small business owners might be targeted due to their access to lump sums of capital (perhaps from business profits or loans) while potentially having less access to sophisticated, independent financial advisory services compared to institutional investors or very high-net-worth individuals.  

Even with Rhew’s agreement to pay $14.87 million in restitution to victims, the prospect of full financial recovery is often slim in Ponzi scheme cases. As discussed, the total losses significantly exceeded this amount. The process of recovering assets can be lengthy and complex, and funds are frequently irrecoverably dissipated by the time the fraud is uncovered. This unfortunate reality means that many victims will likely never recoup their entire investment, leaving them to cope with long-term financial and emotional consequences.  

C. Accounts Receivable Factoring Fraud: Vulnerabilities and Prevention

William Rhew III utilized the concept of “accounts receivable factoring” or “investments in manufacturing debts” as the narrative to legitimize his Ponzi scheme. While Rhew did not appear to be engaging in actual factoring transactions (whether legitimate or fraudulent with specific businesses whose invoices he was supposedly buying) but rather selling investment notes based on this story, the case does illuminate how legitimate, albeit complex, financial mechanisms can be co-opted by fraudsters.  

Accounts receivable factoring is a legitimate financial tool where a business sells its outstanding invoices (accounts receivable) to a factoring company at a discount in exchange for immediate cash. The factoring company then assumes the responsibility of collecting the full invoice amount from the business’s customers. Factoring fraud, in its direct sense, typically involves a business defrauding a factoring company by presenting fictitious or inflated invoices, or by diverting collections that are owed to the factor. Warning signs of such fraud within a company can include excessive discounts or write-offs, sudden unexplained changes in account activity, or discrepancies in documentation.  

In Rhew’s scenario, the “accounts receivable factoring” was the bait for investors. The complexity and somewhat niche nature of this financial activity likely made it an attractive facade. It created an illusion of a sophisticated investment strategy that investors might find difficult to scrutinize independently. The key lesson for investors is not necessarily to become experts in every niche financial market, but rather to recognize universal red flags of investment fraud. Regardless of the purported underlying strategy—be it accounts receivable, foreign exchange, or cryptocurrency mining—promises of unusually high, guaranteed, or consistently stable returns, coupled with a lack of transparency or pressure to invest quickly, should always trigger extreme caution. Due diligence should focus on verifying the legitimacy of the individuals and entities offering the investment, checking their registration status with regulatory bodies like the SEC or FINRA, and seeking independent financial advice before committing funds. The Rhew case serves as a potent reminder that the allure of high returns, packaged in a sophisticated-sounding narrative, can obscure fundamental investment risks if basic due diligence principles are neglected.  

Conclusion and Strategic Recommendations

The case of William Lamar Rhew III and Chadley Capital, LLC serves as a stark illustration of the enduring threat posed by sophisticated Ponzi schemes and the devastating impact they have on individual investors and public trust in financial markets. Rhew’s guilty plea to charges of wire fraud, money laundering, securities fraud, tax evasion, and failure to file tax returns, stemming from a scheme that defrauded over a hundred investors of more than $24 million and involved nearly $9 million in unreported income, underscores the severity and breadth of his criminal conduct. The coordinated response by the IRS-CI, FBI, NC SBI, the U.S. Attorney’s Office, and the SEC highlights the necessity of inter-agency collaboration in dismantling such complex financial crimes.  

The prolonged operation of this scheme, spanning over six years, and its ability to ensnare a significant number of victims despite exhibiting classic red flags, suggests persistent vulnerabilities within the financial ecosystem. Rhew’s exploitation of a seemingly sophisticated investment narrative—accounts receivable factoring—combined with promises of exceptionally high and guaranteed returns, proved tragically effective. Furthermore, his subsequent non-cooperation in the bankruptcy proceedings, particularly concerning the turnover of digital assets like cryptocurrency wallets, points to evolving challenges in asset recovery that demand adaptive legal and regulatory frameworks.  

Based on the comprehensive analysis of this case, the following strategic recommendations are proposed:

1. Enhance Regulatory Oversight and Enforcement for Private Offerings:
   • Regulatory bodies should continue to scrutinize offerings made under exemptions like Rule 506(b), particularly where there are indicators of potential widespread solicitation or involvement of numerous non-accredited investors.
   • Increased surveillance of individuals and entities with a history of unregistered offerings or those making unusually high return promises in their marketing materials could aid in earlier detection.
2. Strengthen Investor Education and Promote Due Diligence:
   • Public awareness campaigns should persistently emphasize the timeless warning signs of Ponzi schemes: promises of high returns with little or no risk, guarantees of profitability, overly consistent returns, complex or secretive strategies, and issues with documentation or registration.  
   • Educational initiatives should empower investors to independently verify the registration status of investment professionals and offerings through resources like FINRA’s BrokerCheck and the SEC’s EDGAR database.
   • Emphasis should be placed on seeking advice from independent, qualified, and registered financial advisors before making significant investment decisions.
3. Bolster Inter-Agency Cooperation and Information Sharing:
   • Continued investment in joint task forces and formalized information-sharing protocols among federal, state, and local law enforcement and regulatory agencies is crucial for the effective investigation and prosecution of complex financial frauds that often cross jurisdictional lines and involve multiple types of illicit activity.
   • Cross-training agency personnel on emerging fraud typologies, including those involving digital assets, can enhance investigative capabilities.
4. Address Challenges in Digital Asset Recovery:
   • Develop specialized expertise and tools within law enforcement and trustee communities to more effectively trace, seize, and manage digital assets (e.g., cryptocurrencies) involved in fraudulent schemes.
   • Explore legislative or regulatory enhancements that could facilitate the recovery of such assets and impose stricter penalties for non-compliance with turnover orders in bankruptcy or other recovery proceedings involving digital assets.
5. Support for Victims of Financial Fraud:
   • Streamline processes for victim restitution and explore avenues for enhanced victim support services, recognizing the profound financial and emotional trauma experienced by those defrauded in Ponzi schemes.  
   • Publicize successful prosecutions and restitution efforts to demonstrate accountability, but also manage expectations regarding the often-limited recovery in such cases.

The Rhew case is a sobering reminder that vigilance, robust regulatory frameworks, effective enforcement, and continuous investor education are paramount in the ongoing fight against financial fraud. While justice is being pursued in this instance, the lessons learned should inform efforts to prevent similar devastating schemes from victimizing others in the future.