Former Atlanta Attorney Sentenced in North Carolina for Million-Dollar Fraud Scheme
|U.S. Attorney’s Office April 05, 2012|
RALEIGH—Gregory Bartko, an Atlanta attorney and securities broker, was sentenced yesterday in U.S. District Court in Raleigh, North Carolina, announced U.S. Attorney for the Eastern District of North Carolina Thomas G. Walker. Bartko received a prison sentence of 23 years for his conduct related to the sale of unregistered securities.
A jury convicted Bartko following a 13-day trial during which Assistant U.S. Attorney David Bragdon presented evidence that Bartko’s fraud harmed approximately 200 victims in 21 different states.
Bartko’s trial centered around his conspiracy with salesman Scott Hollenbeck. Hollenbeck, a member of Gospel Light Baptist Church at the time, used his religious connections to raise millions from investors. Hollenbeck falsely promised guaranteed interest rates of 12-14 percent and AIG insurance protecting the investment. In early 2004, Hollenbeck sent $701,000 to the Caledonian Fund—a fund owned and operated by Bartko and his partner Darryl Laws. In 2008, Hollenbeck was convicted of his role in a separate fraud scheme, Mobile Billboards of America. Bartko and Laws spent all $701,000 of the Caledonian Fund money.
In April, 2004, the North Carolina Secretary of State’s Office issued a cease and desist order against Hollenbeck, forbidding him from committing fraud or selling unregistered securities. Despite this order, in late 2004, Bartko decided to have Hollenbeck directly raise money for another fund he developed, the Capstone Fund. Using the same fraudulent methods, Hollenbeck ultimately raised $2,784,928 for this fund.
In January, 2005, Bartko distanced himself from Hollenbeck by filtering the money Hollenbeck raised through a Winston-Salem, North Carolina business, Legacy Resource Management, which was run by Rebecca Plummer and Levonda Leamon. In this way, Bartko appeared to be accepting money from Legacy, not individual investors, concealing his violation of securities laws and burying his involvement with Hollenbeck. Before Bartko’s trial, Plummer pleaded guilty to the conspiracy to defraud.
Bartko’s lengthy sentence was based in part on his numerous attempts to obstruct justice and his extensive perjury at trial. Notably, Bartko committed fraud on the Forsyth County, North Carolina court by concealing his role in the Caledonian Fund and acting as an attorney to recover money for the very victims he defrauded. Without knowing Bartko’s role in the fraud or his inherent conflict of interest, the Forysth court awarded Bartko $2 million in attorney’s fees.
U.S. Attorney Thomas G. Walker said, “Defrauding decent folks of their life savings amounts to robbing them of their dreams. Such conduct is criminal and deserves severe punishment.”
“Gregory Bartko targeted church members and made empty promises for big investment returns. The FBI and our federal partners dismantled his fraud ring, and we will keep pursuing con men who put their own greed above the law,” said Chris Briese, Special Agent in Charge of the Charlotte Division of the FBI.
“Mr. Bartko victimized everyday hardworking people,” said Internal Revenue Service (IRS)-Criminal Investigations Special Agent in Charge Jeannine A. Hammett. “That makes his crimes even more horrible. It is despicable that Mr. Bartko violated his position of trust for his own personal gain.”
“The Inspection Service will continue to vigorously pursue those who use the U.S. mail to defraud investors of their hard earned money,” said U.S. Postal Inspection Service (USPIS) Charlotte Division Inspector in Charge Keith Fixel. “Cases like this are particularly devastating because people like Gregory Bartko try to hide behind their professional credentials while using them to gain the trust of their victims. Investors should remain vigilant and verify all information for a potential investment, especially if there are claims of outperforming the market.”
The FBI, USPIS, IRS, and North Carolina Secretary of State’s Office all assisted in this investigation. Assistant U.S. Attorney David Bragdon of the Economic Crimes Division of the U.S. Attorney’s Office for the Eastern District of North Carolina represented the government.