Defrauded Senior Citizens Have Their Day in Court

A Wilson County jury returned the investments and imposed punitive damages of $1.25 million against a Johnston County man who defrauded two senior citizens as part of a widespread investment scam.  Walt Wood and Hoyt Tessener represented the plaintiffs.

The jury reached the verdict in Latta & Ellis versus Rainey on Friday, December 5, after a week long trial.  Bruce McDaniel of the Raleigh law firm McDaniel & Anderson represented the defendant.

The plaintiffs were two of hundreds of investors who purchased unregistered securities marketed at that time as “business opportunities” in the sale and leaseback of mobile billboards.  As the investments were marketed, investors would purchase mobile billboards in units of $20,000 from Mobile Billboards of America, Inc. (“MBA”), who would then pay a monthly lease from advertising revenues.  At the end of a seven-year period, MBA would repurchase each billboard unit for the original price paid, so that the investment appeared as a method of preserving principal and making seven years of competitive interest.

In reality, the sale and leaseback program was a Ponzi scheme, where the lease payments came from investors’ own money.  The program was represented to investors as “business opportunities” so that MBA and its sales agents would circumvent state and federal securities laws.  After regulators pursued MBA, they discovered that millions of dollars of retiree wealth had already disappeared.

The defendant, a sales agent, would seek out and earn the trust of senior citizens so that he could induce the purchase of these investments.  The defendant identified senior citizens and invited them to a free lunch and seminars.  He told senior citizens that there was little or no risk, failed to disclose he was making commissions as high as 20 percent and failed to advise senior citizens that the initial “lease payments” would actually come from their own investment money and not from mobile billboard revenues as advertised.

“The jury sent a clear and resounding message that they do not tolerate fraud, especially when it involves taking advantage of senior citizens,” said Walt Wood.