The US Securities and Exchange Commission filed fraud charges against Larry Holley, a pastor with the Abundant Life Ministries in Flint, Michigan. According to the regulator, the pastor used faith-based verbiage to solicit investments from his targets in what he led them to believe was a successful real estate business with hundreds of commercial and residential properties. The SEC’s affinity fraud complaint said that Holley’s scam raised about $6.7M from over 80 investors who were promised high returns.
Holley allegedly held “Blessed Life Conferences” that were actually financial presentations at churches across the US. During these gatherings, he would ask congregants to disclose their financial holdings on cards he gave them to fill out and he promised to “pray over the cards.” He is said to have called investors “millionaires in the making.”
The SEC’s complaint also claims that Holley’s business associate, Patricia Enright Gray, targeted recently laid-off auto works who were given severance packages and she offered to consult with them to help grow their finances. She purportedly promised to roll over their retirement funds into tax-advantaged IRAS and invest their money in Treasure Enterprise, which was Holley’s company. She advertised her services on a religious radio station in Flint.
However, claims the Commission, Gray, who also faces charges in this civil case, never deposited investor money into any IRAs, and Treasure Enterprise had a hard time making enough money to support itself or pay investors. The SEC said that the company, which it also has charged, owes investors about $1.9M in payments.
SEC Director David Glockner accused Gray and Holley of targeting churchgoers and their retirement funds while using their faith-based bond to gain their trust and lure them into the scam. Gray, Treasure Enterprises, and Holley were not registered to sell investments.
Affinity Fraud
Affinity fraud is a type of scam in which members of a specific group are targeted. The group usually has something in common. They may belong to the same church, alumni organization, immigrant community, ethnic group, workforce, team, club, profession social group, etc. With affinity scams, either a bogus investment or one in which important details related to the investment are misrepresented or fabricated is involved. (In the SEC case against Holley, elder financial fraud was also a factor since senior investors were allegedly targeted.)
The SEC civil case against Holley, Gray, and Treasure Enterprise is not the only affinity fraud case that the regulator dealt with this week. The Commission announced that it had obtained a final judgment against an ex-marine who targeted current military members, other veterans, as well as other investors.
Clayton Cohn used the hedge fund to raise almost $1.8M from investors whom he purportedly lied to about his professional trading record, the hedge fund’s performance, and how he would use the proceeds. According to the SEC’s complaint, Cohn raised almost $1.8M but only invested under half of investors’ money while spending over $400K of it on his lavish lifestyle. He hid the hedge fund fraud by generating account statements that touted 200% yearly annual returns.
Last year, Cohn pleaded guilty to related criminal charges. He recently was sentenced to 52 months in prison and ordered to pay investment fraud victims over $1.5M.
As part of the SEC’s final judgment, Cohn is permanently enjoined from violating sections of the Securities Act of 1933 and the Securities Exchange Act of 1934, Rule 10b-5 thereunder, sections of the Investment Advisers Act of 1940, and Rule 206(4)-8 thereunder. The regulator found him liable for over $1.5M in disgorgement.
If you suspect that your investment losses are due to securities fraud, contact our affinity fraud law firm today.
Read the SEC Complaint in the Holley, Gray, and Treasure Enterprise Case (PDF)
SEC Obtains Final Judgment Against Clayton A. Cohn, SEC, March 30, 2017