A homeless veteran and a woman behind a massive GoFundMe scam that raked in over $400,000 pleaded guilty Wednesday in New Jersey federal court.
The woman, Kate McClure, 28, pleaded guilty to one count of conspiracy to commit wire fraud. The veteran, Johnny Bobbitt, 36, pleaded guilty to one count of conspiracy to commit money laundering.
Prosecutors say McClure and her then-boyfriend Mark D'Amico, 39, devised a plan to scam kindhearted social media users by concocting a feel-good story about a homeless veteran giving McClure his last $20 when her car ran out of gas along the highway.
McClure and D'Amico launched the Gofundme page in November 2017 with an original goal of $10,000. When the donations reached $1,500 in less than a week, the couple convinced Bobbitt to play the part of the homeless veteran in exchange for cash. The couple helped him set up a bank account.
The story went viral on Facebook.com and the donations poured in. In just a matter of weeks, the Gofundme page generated over $400,000 in donations.
The following month, McClure and D'Amico deposited $25,000 of the proceeds into Bobbitt's bank account, authorities said.
The couple spent the rest of the money on personal expenses, lavish vacations, a new BMW, and designer bags and clothing. Later, McClure admitted she withdrew $85,000 in cash to "hit the casino hard."
As the story picked up steam around the world, the international news media pursued the trio for exclusive interviews. But their story began to unravel when Bobbitt spent his $25,000 and demanded more cash.
With the help of friends on social media, Bobbitt accused the couple of stiffing him out of the $400,000.
Authorities launched an investigation, and Gofundme froze the account to stop accepting new donations.
An attorney retained by McClure told officials she only created the ruse to help Bobbitt.
"The story about the gas was what I refer to - and this is where the prosecutors and I have a disagreement - on Kate's part," said defense attorney James Gerrow. "It was puffing, it was exaggeration trying to help this veteran."
McClure said, in addition to the $25,000, she generously gave Bobbitt $75,000 to purchase a used RV and his dream car, a 1999 Ford Ranger.
When McClure and Gerrow attended a second meeting with New Jersey prosecutors, the true story behind the scam came to light.
"At the second conference, the prosecutors were talking about evidence,” Gerrow said. "At that point in time, I turned to Kate and said, 'Do you understand what they're saying?'"
"At that point, she became very emotional," Gerrow said. "She was in tears, she was crying, visibly shaking because she realized what they were saying - and that is that she had been being used by D'Amico and by Bobbit. She had been set up."
Prosecutors subpoenaed McClure's phone records and found text messages she sent to a friend less than an hour after the GoFundMe campaign went live.
In one text message, McClure wrote, "OK, so wait, the gas part is completely made up but the guy isn't. I had to make something up to make people feel bad. So, shush about the made up stuff."
McClure, D'Amico, and Bobbitt were all charged with second-degree theft by deception and conspiracy to commit theft by deception. McClure and D'Amico turned themselves in, but authorities issued an arrest warrant for Bobbitt who fled the area. He was later arrested.
If convicted, they each face 5-10 years in prison, prosecutors said.
Gerrow blames GoFundMe for contributing to the scam by not cutting off donations after the set goal was reached.
"At $10,000, Kate tried to cut it off with GoFundMe, [but] they told her that couldn't be done," Gerrow said. "She also tried to cut it off again at $100,000 because she was very concerned about the amount of money that was coming into the fund."
But a spokesperson for GoFundMe, which agreed to refund the $400,000 to the 14,000 people who donated to Bobbitt, disputed Gerrow's claims.
"Campaign organizers are in full control of their campaigns, including their ability to turn off donations," spokesman Bobby Whithorne told ABC News in November 2018.
In fact, McClure did close the account to stop receiving donations - only to reopen it days later.
In a follow-up post on the GoFundMe page, McClure explained why she reopened the campaign to continue receiving donations.
"For the short time that we took it down, it is obvious that people still want to donate to his cause... You guys continue to amaze us."