$11 million lost in diamond, gold scam

Dozens of elderly, retired victims swindled in exporting scheme

SAN JOSE — A dual Swiss and U.S. citizen will not be recrossing the Atlantic for the foreseeable future after he was indicted in an alleged gold and diamond exporting scam the FBI says swindled scores of retired and elderly investors — many from Santa Clara County — out of $11 million.

A federal grand jury last week charged Fritz Kramer, 68, with 11 counts of wire fraud and one count of commodities fraud. He was remanded to jail after prosecutors from the U.S. attorney’s office and some of Kramer’s alleged victims convinced a federal magistrate that Kramer, whose last known residence was in Norway and is accused of running the scheme mostly outside the United States, is a flight risk.

“Fritz Kramer should never be allowed on a bail, he has been running from the law for over eight years and has nothing to lose to run away,” wrote a San Jose investor in a letter to federal prosecutors.

Dating back to 2008, Kramer allegedly contacted about 40 investors through telephone, email and wordof-mouth to convince them to bankroll a project that would export gold and diamonds from the Democratic Republic of Congo to Europe, Asia, and the United States. Prospective investors said Kramer told them that it was a “philanthropic endeavor” that cut out “corrupt middle men” out of the gold and diamond trade, with the promise of a tenfold investment return and increased profits for African miners.

Over eight years, prosecutors say Kramer never paid a single cent to his investors and offered them a litany of excuses: A vital engineer needed multiple surgeries; $80,000 in cash burned up in a car crash; bribe money for “corrupt government officials in Africa”; certification, insurance, storage and shipping costs; and taxes.

Meanwhile, Kramer continued to press his investors for more money, having them wire funds to various locations in Africa, and even asked them to recruit family and friends into the investment pool, prosecutors say. He also allegedly produced an array of phony mining documents to convince investors of the project’s authenticity.

An undercover FBI agent posing as an investor obtained the documents and in September presented them to the General Secretary for the DRC’s Ministry of Mines, who declared them to be fakes, authorities said. Papers meant to show investors that the purported diamonds had Kimberley certification — a process that verifies that stones are not “conflict” or “blood” diamonds whose sales fund warlord activity — were deemed fake in part because Kramer reportedly kept misspelling “Kimberley.”

Kramer was arrested July 6 after he met with an undercover agent from the FBI, which had been investigating the alleged scheme for at least a year. Kramer reportedly “continued to insist” on the authenticity of the export operation.

The defendant faces a maximum sentence of 25 years in federal prison, a $250,000 fine and restitution. He is represented by the Office of the Federal Public Defender, which has a practice of not commenting to the media.

Alleged victims were vocal in demanding that Fritz not be freed. That includes a retired school principal who claims she gave $355,000 to Kramer from a home-equity line and retirement funds.

“My gut told me it was a scam, and I wrote as much to my colleagues and to Fritz Kramer. I made a bad decision to invest and feel incredibly foolish for continuing even though I never got any money in return,” she wrote in a letter to federal prosecutors.

Another alleged victim wrote: “I want to thank you for catching Fritz Kramer. He is a liar, thief and fraudster. Everything you hear about Kramer from other people is true. He needs to be locked up forever.”