Clark continues crack down
Published: September 7,1998
The Secretary of State`s office, which registers all stockbrokers and securities under the Mississippi Securities Act and is the state equivalent of the federal Securities and Exchange Commission, is becoming more aggressive enforcing the law, said Eric Clark, Secretary of State.
“We`re limited in that we don`t have enough staff to go out and audit every broker, but when we get signals there are problems, we jump on it real fast,” Clark said.
Clark said there are several reasons for an increase in fraudulent activity.
“More people than ever are involved in the stock market today,” Clark said. “Throughout the `90s, Americans have enjoyed a bull market and many people have made a lot of money. Some people began to feel they could expect a 20% annual return on their investment from now on. That is unrealistic. Such expectations can make an investor vulnerable to unscrupulous persons.”
In addition to educating the public about suspicious investment opportunities, Clark`s office also guards against old-fashioned criminal activity such as embezzlement, he said.
“We take very seriously the job of regulating securities dealers because thousands of Mississippi citizens give them their life savings to invest for their children`s college education or for their own retirement,” Clark said. “Those citizens deserve to be secure in the honesty of their investment. We have to be careful about scam artists who might prey on citizens.”
Last month, Clark took action against stockbroker Joseph R. Belew for misuse of investment funds. Belew turned himself in to the Hinds County Sheriff`s Department, and a judge froze his personal bank accounts at Clark`s request. He was later released after posting two $20,000 bonds on one charge each of embezzlement and securities fraud.
Belew, 53, an agent of Chimneyville Investments Group, located at 1675 Lakeland Drive in Jackson, faces felony charges and is subject to a $25,000 fine and five years imprisonment for each count, or up to ten years for one count.
Evidence obtained via search warrant indicated a possible “ponzi” scheme, where promoters offer high rates of return on investments. Instead, the funds are used to pay earlier investors. When the scheme collapses, current investors lose their money.
The investigation began after a Mississippian complained to the Secretary of State`s office that he never received a prospectus, a 1099 tax form from Belew indicating investment income, or a monthly account statement. In one case, Belew received $104,000 to invest that was deposited into Belew`s household account.
“The Belew case involves a lot of money and I see it as a major case,” said Clark. “Our investigation is continuing.”
The Belew case is not the only high profile investigation involving Clark`s office this year.
In July, Douglas Gulley, Jr. of Ocean Springs was indicted on 35 counts of embezzlement involving more than $3 million in “investment” funds. Gulley, 51, who represented Minnesota Mutual Life Insurance, had clients in all three coastal counties, in Starkville, Hattiesburg, Baton Rouge, New Orleans, and in Texas.
“In the case of Mr. Gulley, we were able to get a lot of money back for those people through his company,” Clark said. “In the cases of Belew and Gulley, the issue wasn`t registration. It was allegedly a misuse of funds
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