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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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TO NC SENIOR CONSUMER FRAUD TASK FORCE MEMBERS

******Alert #275******

Senior Fraud Alert: "Classic Ponzi Scheme" Victimizes Friends, Nets Lenghty Prison Term

Task Force member John Maron of the Securities Division, North Carolina Department of the Secretary of State, shares with us news that last Thursday the Secretary of State and Iredell County District Attorney Sarah Kirkman secured guilty pleas to 19 counts of securities fraud by an unregistered investment broker named Shelby Dean Martin, age 73. Martin resided in Mooresville, NC. The vast majority of the 19 victims cited in the indictments were older citizens, according to John, and many of them knew Martin through various local organizations. Iredell County Superior Court Judge Christopher Collier sentenced Martin to a prison term of no less than nine years, eight months and no more than thirteen years. In addition, Judge Collier ordered Martin to return $5.35 million to those 19 victims. Secretary of State Elaine Marshallís announcement of the guilty pleas describes the defendantís scheme as follows:

Between January 2004 and December 2008, Martin collected over $18.5 million from more than 100 investors. He told investors that their money would be used as venture capital for various companies, although many victims told investigators that Martin never told them specifically which companies he was investing in. All of the victims were told that their principal and interest were guaranteed and that they could get their money back at any time upon a 30-day notice. Martin issued promissory notes and receipts of funds to each of the victims, which detailed the guarantees the defendant promised to the victims. The victims were all guaranteed a rate of return between 10-50% per year on their principal investment.

However, Martinís own bank records revealed that he used new investor money to pay returns to previous investors, the hallmark of a classic Ponzi scheme. Many of the victims knew Martin from church or other social circles.


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

Date: July 5, 2011

David N. Kirkman
Task Force Alerts Chair
Assistant Attorney General
Consumer Protection Division
Office of Attorney General Roy Cooper
114 West Edenton Street
9001 Mail Processing Center
Raleigh, NC 27699-9001
Tel. 919-716-6000
Fax 919-716-6050

 

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