|For Immediate Release||FFI Contact: Chris Riggall|
|February 23, 2001||
ATLANTA, GA … A multi-year investigation by the Secretary of State’s Securities Division has culminated in guilty pleas and lengthy sentences for two South Georgia men who orchestrated a promissory note scheme targeting elderly consumers, Secretary of State Cathy Cox said today.
Defendant Wood, the former chief financial officer of Southeastern Integrity, received 10 years of probation in addition to the 10-year prison term. Eubanks, who was chief executive officer of the firm, received 15 years probation coupled with his five-year time to serve. Both were ordered by the court to make restitution of some $1.3 million fraudulently taken from investors.
In November 1999 the
Secretary of State’s office secured court approval to shut down Southeastern
Integrity and appoint a receiver to protect its remaining assets.
That action was taken after investigators determined that the company was
selling unregistered securities as part of a classic “Ponzi” scheme. The firm leveraged its relationship with elderly clients, who
had purchased conventional insurance policies, to persuade them to purchase
fraudulent promissory notes that would purportedly pay high interest dividends.
The investigation identified at least 64 elderly clients, some as old as
100 years old, who were defrauded in the scheme.
A number of customers lost their entire life savings.
Last year, a civil racketeering case brought by the Secretary of State’s
office found the men responsible for violations of securities laws and ordered
restitution to clients of $1.3 million. The
case was referred to Dougherty County District Attorney Ken Hodges office last
year for criminal prosecution.
“I am extremely pleased that the court has applied serious penalties against these two men for their role in directing this fraudulent scheme,” said Secretary of State Cox. “District Attorney Ken Hodges and his staff did an outstanding job insuring that these criminals were brought to justice. This is a tragic case for the scores of elderly investors whose trust was violated by these scam artists, but I am grateful that our office’s action, along with local law enforcement, prevented even more Georgians from falling victim to this criminal enterprise. These lengthy sentences send a powerful message that we will deal harshly with those who steal with a telephone and a persuasive sales pitch, just as we do those who steal with a knife or a gun,” Cox added.
Nationally, promissory note schemes have bilked Americans of more than $300 million in the last two years and have emerged as the leading source of securities fraud in the nation. In recent months, criminal and civil actions have been pursued throughout the country against many individuals involving thousands of promissory note victims.
Press Office ~ 110 State Capitol ~ Atlanta, GA 30334 ~ 404.656.4269 FAX: 404.657.5804