JACKSON — The Mississippi Secretary of State’s Office, which enforces Mississippi’s securities laws, has seen less securities fraud activity recently, thanks to its aggressive investigation policy and calls from concerned investors.
“We take very seriously the responsibility of protecting Mississippians from securities fraud,” said Secretary of State Eric Clark. “We don’t have the staff to do routine audits of every stockbroker and bond dealer in the state, so we rely on customer complaints. But when we get one, we are super aggressive in following up on it and investigating it.”
Earlier this month, Clark and the Securities Investor Protection Corporation (SIPC) announced that convicted embezzler Joseph R. Belew, 53, of Jackson, returned about $793,000 to victims of a scam.
Belew embezzled $1.2 million of his clients’ money for his own personal use. He pleaded guilty to one count of embezzlement and two counts of securities fraud and was sentenced to 18 months in jail with an additional three and a half years suspended.
“When we catch someone who’s been stealing investors’ money, we look to do two things,” Clark said. “One: work with prosecutors to secure a conviction that results in prison time; and two, recover the victim’s money. In this case, we were able to do both.”
In the Belew case, the U.S. District Court in Jackson appointed SIPC, a nonprofit corporation funded by its member broker-dealers, as trustee for the liquidation of Belew’s failed broker-dealer, Chimneyville Investments Group Inc., of Jackson. SIPC satisfied all customers up to the statutory limits.
Working with the secretary of state’s office, SIPC then recovered sufficient funds to completely satisfy claims of Chimneyville customers injured by Belew’s actions, including those whose losses were more than $100,000. Judge Edward Ellington of the U. S. Bankruptcy Court in Jackson approved final payments to victims on March 7.
Last December, Clark assessed a $150,000 penalty against a teenager, Carey Wayne Nash, formerly of Rankin County, who took more than $90,000 in investments from Mississippians and spent the money for his personal use, including on a car, a boat and a trip to Hawaii.
“This was a serious case of violated trust,” Clark said. “It’s particularly amazing when you consider the whole scam was perpetrated by a young man with no experience in a complicated investments field. The penalty should send a strong signal that we will enforce Mississippi’s commodities law aggressively.”
Nash was 18 when he convinced six Mississippians that he was an experienced and successful investor in the commodities and futures market. Nash met his investors through church connections. In addition to the $150,000 fine, Nash must pay $6,131.85 to cover the secretary of state’s investigative costs.
“We didn’t take any heat on that situation, just because Nash was so young,” said David Blount, spokesman for the secretary of state’s office. “In fact, we were applauded for our strong stand to protect the citizens of Mississippi.”
Last month, Clark warned Mississippians about an e-mail scam that promised millions of dollars from Nigerian bank accounts.
The e-mail message appeared unsolicited and promised $40 million from Nigerian government officials. Scam perpetrators used bank information to withdraw money from the victims’ accounts. The victim was also required to pay “up-front money” in the form of fees to receive a future pay-off.
Clark’s office received more than a dozen calls questioning whether the Nigerian overture was legitimate.
“We’ve seen this scam in various forms for years,” Clark said. “Mississippians were receiving e-mails pitching the same old rip-off. My message was: Don’t believe it.”
In February, Clark issued an order shutting down Tupelo bingo charity Youth Hope Ministry, established in 1999, for failure to disclose financial information required by Mississippi law.
“Mississippians must have confidence that their charitable donations are being used in accordance with the law,” Clark said. “That’s true with charities that operate bingo halls, and one reason we take our responsibility very seriously.”
According to documents on file with the Mississippi Gaming Commission, Youth Hope Ministry took in $3.82 million in bingo receipts in 2000. In order to operate a bingo hall, at least 40% of a bingo’s proceeds must go to charity. 1999 IRS records indicated the charity spent no money on charitable services to fulfill its statement of purpose.
At press time, Youth Hope Ministry had submitted an audited financial statement and had reopened, said Blount.
Overall, there’s a downward trend in fraudulent activity in Mississippi, Clark said.
“Anecdotally, I hear that we’re having a good effect, and I’m very proud of that,” Clark said. “It does help keep people straight who are tempted to do wrong because they know there’s a cop on the beat that is working hard on the job.”
Contact MBJ contributing writer Lynne Wilbanks Jeter at firstname.lastname@example.org or (601) 853-3967.