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Franklin, Andrews, Kramer & Edelstein (DWP)
Scam victims left to pick up pieces
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Monday, November 02, 2009 7:01:42 PM
Scam victims left to pick up pieces
By John Henderson
Rocky Mount Telegram
Sunday, November 01, 2009
In 2001, Lillie Greene's life was turned upside down.
Her son, not knowing he was diabetic, suffered an aneurysm and went into a coma for 32 days.
After he came out of it, Greene learned he was paralyzed on one side after suffering a stroke.
"His father had died earlier. I didn't want my son to go to a group home," she said.
Greene decided to take care of him and retire from her job of 27 years as a line coordinator at Abbott Laboratories.
A co-worker told her that local financial advisor Joe Jones could be her saving grace, bolstering her retirement income. But she ended up losing $158,000 after Jones drained her 401(k) account into a Ponzi scheme. The pyramid scam has left local retirees struggling to pay their bills.
A co-defendant in the case, Charles Devernie Harrison, was sentenced to 14 years in prison last week.
Harrison also was ordered to pay restitution of more than $13 million in connection to an investment scheme known as "BAB Productions." But a spokesperson for the federal prosecutor's office in Charlotte said there is no indication he can pay this.
Greene, 65, lives off Social Security and has taken a part-time job as a school bus monitor.
"I count dollars every day," Greene said. "I'm living from day to day."
She said she struggles to pay bills, including more than $150 a month she requires in medications.
"I'm fighting every day not to file bankruptcy," she said.
According to documents filed by the U.S. Attorney's office in Charlotte, in 2003 and 2004, Jones and Harrison conspired to defraud investors by inducing them to invest in BAB Productions.
The investors often were elderly and investing retirement money, the documents state.
"During the course of the scheme, the conspirators induced more than 200 investors to invest more than $11 million," the documents state.
Investors' funds were guaranteed to return 10 percent per quarter, when in truth, BAB Productions was generating no significant independent revenue, the documents state.
Investors were promised that their money would be used for concerts and nonprofits such as churches, colleges and universities. But in truth, investments were diverted back to other investors in "Ponzi fashion" to make interest payments to investors who demanded their money back, court documents state.
They also state that a co-conspirator invested the money in a day-trading account at Ameritrade, losing $400,000 through poor trades. The investors' money also was diverted to the defendants' personal business ventures, clothing, travel and entertainment, the documents state.
In 2007, Jones was sentenced to more than 20 years.
Greene said Jones, who operated his business out of an office in Tiffany Square, was very convincing.
"I was real impressed with Joe when I met him," Greene said. "He was well-dressed. When I say well-dressed, I mean, well-dressed - dress slacks, a nice shirt and shiny shoes. I mean, very neat."
She also said Jones had impressive credentials on the wall.
"He had a secretary. He had an FDIC-insurance license hanging up," Greene said. "There was nothing to make us (investors) doubt that he was not legit."
Greene said her initial investments with Jones made through Investors Capital were legitimate.
"When I went with Joe, he had a license. He was with Fidelity Investments," Greene said.
At some point, Jones went on his own, forging her signature and moving her money into BAB Productions, she said.
Mary Henderson, 62, of Rocky Mount poured $180,000 of her retirement account from her job of 22 years at Abbott Laboratories into the Ponzi scheme.
The loss has forced her to work in her retirement years. She travels each weekday to work the line at a pharmaceutical plant in Zebulon.
Henderson said Jones made a convincing case to invest in BAB Productions.
"I said, 'Are you sure it's legitimate?' He said, 'Yeah.'"
Jones then went on to sell the virtues of BAB Productions, contending it invested in religious movies and colleges.
She said it sounded good.
"He was talking about different colleges that I knew of up in Durham and Raleigh and Chapel Hill," she said.
She said she placed her trust in Jones, agreeding to invest $60,000 in BAB Productions in 2001. "I said, 'Joe, you are my finance man.' I said, 'You know what is best for me. Don't mess up my money.'"
Jones occasionally would pay her $1,000, saying it was an interest payment.
She said Jones was impressive when she first invested with him in 2001.
"He had a three-piece suit then," she said.
Over time, a package came to her home from Fidelity Investments stating that another $60,000 of her money had gone into BAB Productions.
Concerned, she called Jones. "He said, 'We've got another space open (in BAB),'" Henderson said.
Henderson said she was surprised that her entire retirement account was being drained into BAB when Jones previously had advised her to spread her risk around.
"I trusted him. I really did," she said.
In 2005, shortly before his arrest, Jones stopped taking her calls. Henderson got suspicious.
"I was trying to get my money out," Henderson said. "Something went off in my head that something is not right. I started to panic."
Henderson said she does not carry a grudge against Jones in her retirement years, even though her full-time job leaves her little time for those things she had planned to do, such as traveling and shopping.
"I don't have much time for that," she said. "I work. Come home. Sleep. Go to work."
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