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David N. Kirkman
Task Force Alert
Chair
Asst Attorney General
Consumer Protection
NC Department of
Justice
P.O. Box 629
Raleigh, NC 27602
919-716-6000

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North Carolina Division of Aging and Adult Services

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Federal Jury in NC Convicts Two in Investment Scheme Targeting Seniors

******Alert #188 ******

Yesterday, following a four-week trial, a federal jury in Raleigh convicted Scott B. Hollenbeck of Orlando, Florida and Laurinda Holohan of Concord, Ohio of one count of conspiracy and twelve counts of mail fraud. The case involved an investment scheme pitched largely to seniors. The verdicts were announced by the United States Attorney for the Eastern District of North Carolina, George E. B. Holding.

The $55 million scheme, according to the U.S. Attorney, involved pitches, sometimes made at free lunch seminars, for investments in “mobile billboards” that would be placed on the sides of large trucks. Advertising revenues from the “billboards” supposedly would generate substantial revenues. Investors were told that investments in $20,000 increments would result in “guaranteed” monthly checks based on a return of 13.49%, with the return of their entire investment at the end of seven years. In reality, according to the U.S. Attorney, little in the way of advertising revenue was ever generated. Instead, the enterprise operated as a large and fraudulent Ponzi scheme, where payments made by newly recruited investors were used to make payments to previous investors and enrich the defendants. Mr. Holding stated further, “This sophisticated fraud scheme caused terrible harm to elderly investors in North Carolina and elsewhere.”

Months earlier, three other defendants in the case pled guilty. The U.S. Attorney stated in his announcement that Michael A. Lomas of Pasadena, California pled guilty to a count of mail fraud and that Arthur J. Anderson, Jr. of Raleigh, NC and Susan Knight of Eastlake, Ohio pled guilty to conspiracy to commit mail fraud. Anderson, an insurance agent, pitched the mobile billboards investment using the corporate names “Legacy Estate Concepts, LLC” and “Arthur Anderson Retirement Planning, Inc.,” according to prosecutor Holding. Another defendant named in the case, Barry C. Maloney of Bethesda, Maryland, was acquitted by the jury.

Three agencies represented on the NC Senior Fraud Task Force investigated the case: the United States Postal Inspection Service, the FBI and the Securities Division of the North Carolina Department of the Secretary of State.

******End of Alert******

Date: February 7, 2008

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