Dickson Woman Arrested for Role in Investment/Ponzi Scheme Involving Brentwood Financial Adviser Michael J. Park
Investors Defrauded of More Than $9 Million
|U.S. Attorney’s Office April 01, 2010|
NASHVILLE, TN—Donna Jones, 37, of Dickson, TN was arrested today on charges of conspiracy, bank fraud, money laundering, mail fraud, and wire fraud, announced United States Attorney Edward M. Yarbrough.
The arrest follows Jones’ indictment by a federal grand jury in Nashville on March 25, 2010. Jones, 37, was the former administrative assistant and office manager for Michael J. Park, a Brentwood, Tennessee financial advisor who was charged in 2009 with mail and wire fraud for operating a sophisticated investment fraud/Ponzi scheme that defrauded investors of more than $9,000,000. Park, who has already pleaded guilty to mail and wire fraud charges, is awaiting sentencing.
The 17-count indictment alleges that between September 2001 and June 26, 2008, Jones and Park operated a scheme to defraud investors who deposited funds with Park’s company, Park Capital Management Group (“PCMG”), for investment in brokered stocks and other marketable securities. According to the indictment, Jones and Park convinced their broker-dealer clients, friends and acquaintances to become clients of PCMG and to transfer money from their existing investment accounts with other broker dealers to a “managed account” with PCMG. As an inducement to lure clients to invest with PCMG, Park promised investors annualized returns of 10-28 percent. Despite their representations to investors, the Indictment alleges that Jones and Park never intended to invest the client funds. Instead, the Indictment alleges that the money placed with PCMG was embezzled by Jones and Park for their own personal use.
“Cases like these are very large and very serious, in particular for the investors," United States Attorney Edward M. Yarbrough said. “According to the Indictment, Donna Jones and Michael Park repeatedly encouraged people to invest by falsely promising inflated returns on their money and concealing their illegal activities by creating fictitious documents designed to mislead investors. Many investors lost their savings as part of the elaborate Ponzi scheme. In cases like these, a lot of people have invested money they can't afford to lose, particularly in hard economic times. The United States Attorney’s Office will diligently and aggressively prosecute the perpetrators of such schemes.”
The Indictment also alleges that Jones and Park made representations to investors that their PCMG investment accounts were profitable and earning inflated returns on investment. In order to conceal the scheme from investors and to encourage future investment in PCMG, Jones allegedly fabricated documents designed to deceive investors into believing that their funds were being actively traded and managed, and meeting the significant growth expectations they had been promised. The fictitious investment documents allegedly included stock purchase confirmations, account statements, summaries of investments, IRS Forms 1099, and invoices for account maintenance fees and commissions.
The Indictment further alleges that Jones made false representations to investors that their investments were safe. To further assure investors of the validity and safety of their investments, Jones allegedly caused the seal of the Securities Investor Protection Corporation (“SIPC”) to be placed on fictitious PCMG stock purchase confirmations and quarterly investment statements that were regularly provided to investors. In fact, according to the Indictment, PCMG was not a member of SIPC, and SIPC provided no protection for PCMG investors. In order to keep track of changes in fictitious PCMG investor accounts, the Indictment alleges that Jones created and maintained a Microsoft Excel spreadsheet in which Jones recorded each deposit or withdrawal of client funds, any individual requests by investors for purchase or sale of specific securities, and any requests for a report on the status of an individual PCMG account. According to the Indictment, if a client requested a withdrawal from a PCMG investment account, the withdrawal amount would be covered by transferring money from newly solicited or existing client funds.
Finally, the Indictment further alleges that, between September 2001 and June 26, 2008, approximately 28 individuals invested funds in excess of $9,000,000 in fictitious PCMG investment accounts. Allegedly, no stocks or securities were ever purchased or traded for clients who invested funds with PCMG, and the PCMG “managed accounts” existed only on paper.
“U.S. Postal Inspectors are responsible for protecting the sanctity of the nation's mail system,” said Martin D. Phanco, Inspector in Charge, Atlanta Division. “When allegations are made that the U.S. mail has been used to violate this trust, it’s our job as postal inspectors to restore America’s confidence in the integrity of its postal system and help bring the violators to justice.”
“IRS Criminal Investigation agents use their expertise in conducting complex financial investigations to follow the paper trail and unravel possible violations of federal law,” said Christopher Pikelis, Special Agent in Charge, IRS Criminal Investigation - Nashville Field Office. “We work jointly with our federal and state law enforcement partners offering our financial expertise.”
“Today's indictment is the result of hard work by local, state and federal agencies to bring to justice those who would seek to victimize investors through false promises and fake returns,” said My Harrison, Special Agent in Charge of the Memphis Division of the Federal Bureau of Investigation. “The FBI will continue to work with our partners to identify financial schemers and criminals who defraud for personal profit.”
Brentwood Police Chief Ricky Watson stated, “I would like to thank the FBI, U.S. Attorney’s Office, U.S. Postal, and the other federal agencies that aided in the prosecution of this crime. This type of crime goes well beyond the scope of what we or any local agency can prepare to deal with in order for justice to prevail. The arrest and prosecution of Donna Jones will help heal some of the deep wounds of the victims of this crime.”
Jones was arrested this morning by federal agents and is expected to make an initial appearance this afternoon before U.S. Magistrate Juliet Griffin. If convicted, Jones faces a maximum of eight years in prison.
The charges in the Indictment were brought following a coordinated investigation conducted by agents from the Federal Bureau of Investigation, the United States Postal Inspection Service, IRS Criminal Investigation - Nashville Field Office, the Tennessee Bureau of Investigation, and the Brentwood Police Department. Assistant United States Attorney John K. Webb is prosecuting the case for the United States.
The public is reminded that an indictment is merely an accusation and is not evidence of guilt. All defendants are presumed innocent unless and until proven guilty in a court of law.