Guilty plea in fraud case | Arkansas Blog

Thursday, March 15, 2012

Guilty plea in fraud case

Posted By on Thu, Mar 15, 2012 at 7:41 PM

The U.S. attorney announced today a guilty plea in a fraud case in which a man promising guaranteed investment returns took $700,000 from dozens of people and spent it on his own needs, including children's private school expenses.

NEWS RELEASE

LITTLE ROCK — Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas and Brian Marr, Special Agent in Charge of the Little Rock Field Office of the United States Secret Service, announced today the waiver of indictment and plea of guilty to a felony Information by Lee Charles Johnson, age 42, of Little Rock, Arkansas. The Information, which was filed in open court today, charges Johnson with one count of mail fraud in violation of Title 18, United States Code, Section 1341.

From January 2007 until May 2011, Johnson purported to run TJC Group as well as Johnson Food Group and Keystone Hybrid Fund. The defendant sold securities and investment opportunities to these three companies to at least 46 couples, individuals, and entities; however, Johnson was not licensed to give financial advice or to sell securities in the State of Arkansas.

At the plea hearing held before United States District Judge D. Price Marshall, Jr., Johnson admitted that each victim was told they would have individual accounts into which their money would be deposited and that the funds would not be withdrawn from the account. Johnson drafted contracts for the victims guaranteeing a 12-15% return on their investment. Upon receipt of funds, Johnson utilized the money for his own personal use to include the purchase of trips and vehicles. He also used the funds to make child support payments, tuition payments for his children's private school, and he made tens of thousands of dollars in cash withdrawals. In order to lull the victims into believing that their funds were being used for proper investment purposes, Johnson mailed maturity date letters which stated that even with the turbulent economic times, the accounts were fully protected. Each month the victims made payments via the United States mails and Johnson mailed the victims’ account statements on a periodic basis showing the balance the victim owed on the investment. The loss to date is $734,846.38.

One of the victims invested all of the military survivor benefits she received after her husband was killed in Fallajah. Another victim invested all of the life insurance benefits she received after her husband died. To date, each woman has had less than $2,000 of those funds returned.

Thyer stated, “Defrauding anyone of their hard earned money is egregious, but the fraud is especially egregious when those defrauded have lost the financial security intended for them by their loved one in their death. The United States Attorney's Office will continue the relentless pursuit of justice for those swindled out of hundreds of thousands of dollars by deceptive thievery."

“The Secret Service has always taken an aggressive stance regarding all types of financial crimes since our inception. The successful prosecution of the defendant by the United States Attorney’s office regarding our most recent investment scheme, is a testament to the efforts of both offices.  It was truly unfortunate that the defendant in this case, through his investment  scheme, allowed over 46 victims to lose funds in excess of $700,000.00 dollars,” stated Marr.

The statutory penalty for embezzlement for mail fraud is not more than twenty (20) years imprisonment and a fine of up to $250,000. Johnson remains free on his own recognizance pending sentencing which will be set at a later date by the Court.

The investigation was conducted by the United States Secret Service. It is being prosecuted by Assistant United States Attorney Karen Whatley.

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