Nashville, Tennessee Man Criminally Charged with Investment Fraud Scheme
| U.S. Attorney’s Office August 10, 2009 |
RALEIGH—United States Attorney George E.B. Holding announced an seven-count Indictment charging JOHN KENT COLVIN, 53, of Nashville, Tennessee, with a criminal investment fraud scheme. The Indictment was issued by the Grand Jury on August 5, 2009.
COLVIN is charged with one count of conspiring to commit mail fraud and securities fraud, in violation of Title 18, United States Code, Section 371, and six counts of mail fraud, in violation of Title 18, United States Code, Section 1341. The Indictment alleges that COLVIN conspired with, among others, Scott Bradley Hollenbeck, who is not charged in this Indictment, but was convicted in this District of numerous counts of fraud concerning his sales of another purported investment called, “Mobile Billboards of America.” United States v. Scott B. Hollenbeck, No. 5:07-CR-117-6BR.
The Indictment alleges that during a two-year period starting in 2003, COLVIN organized an investment fraud scheme that collected well over 20 million dollars from investors in North Carolina and elsewhere. Potential investors were told about the benefits of investing in various “funds” and “programs” identified by variations on actual business names including “Franklin Asset Exchange, LLC,” “The Webb Financial Services, Inc.,” and “Disciples Limited, LLC.”
The Indictment alleges investors were told numerous false and misleading things about these investments, including: (1) their investments and the promised returns in these “funds” were “guaranteed”; (2) the investments were insured under a “surety bond program”; and (3) the money invested would be used to make investments with well-known financial entities. The Indictment alleges that, in fact: (1)there was no basis for “guaranteeing” the investments; (2) the “surety bond program” was fabricated; and (3) most of investors’ money—over 17 million dollars—was sent to a single, highly speculative use—a bank account in New York controlled by an individual attempting to develop a coal mine in Montana.
The Indictment also provides notice that the United States is seeking forfeiture of property from COLVIN, including all property constituting or derived from fraud proceeds.
The maximum penalties for conspiring to commit mail and securities fraud are up to five years imprisonment followed by up to three years of supervised release, and a fine of up to $250,000 and/or twice the gross gain and twice the victims’ gross loss. The maximum penalties for mail fraud are up to 20 years imprisonment followed by up to three years supervised release, and a fine of up to $250,000 and/or twice the gross gain and twice the victims’ gross loss.
Investigation of the case was conducted by the United States Postal Inspection Service, the Federal Bureau of Investigation, and the Internal Revenue Service – Criminal Investigation. Assistant United States Attorney Clay C. Wheeler is in charge of the prosecution.
An indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial in which it will be the United States’ burden to prove guilt beyond a reasonable doubt.