PURPORTED INVESTMENT ADVISOR CHARGED WITH RUNNING 15-YEAR PONZI SCHEME THAT COLLECTED $15 MILLION
Retired MTA Train and Bus Operators Targeted in Scam
LOS ANGELES – A resident of Topanga was charged today with running a 15-year-long Ponzi scheme that targeted retired train and bus operators and caused more than $7 million in losses.
Thomas L. Mitchell, 64, was named in a criminal information filed today in United States District Court. In a plea agreement also filed today, Mitchell agreed to plead guilty to mail fraud, a charge that carries a statutory maximum sentence of 20 years in federal prison.
Mitchell operated or used several companies to perpetrate his fraudulent scheme, including the purported investment advisory firm of Mitchell, Porter & Williams, Inc. (MPW) in Los Angeles; Adivanala AA Investment Trust (AAA Trust) in Los Angeles; and AB3, Inc. in Santa Ana. According to court documents that detail his investment scheme, Mitchell targeted retirees, many of whom had been employed as transit operators by the Los Angeles County Metropolitan Transportation Authority.
Mitchell portrayed himself as a successful investment advisor and falsely promised high investment returns through stocks, bonds or real estate. He also promised that his investments were safe – including falsely telling at least one victim that her principal was insured by the United States government. With these and other false claims, Mitchell convinced the victims to transfer their retirement funds from their employers’ retirement plans into accounts that he controlled. As part of the scheme, AAA Trust and AB3 issued purported promissory notes that promised annual returns of up to 12.5 percent.
Mitchell, in actuality, was running a Ponzi scheme. Mitchell “placed only a minuscule fraction of the retiree victims’ money in legitimate investments,” according to the statement of facts in his plea agreement. “Moreover, instead of taking steps to protect the retiree victims’ principal investments, [Mitchell] misappropriated virtually all of their money to, among other things, live a lavish lifestyle,” which included a luxury apartment, three luxury automobiles, expensive vacations, high-end restaurants, and
tickets to sporting events and shows. About half of the investors’ money was used for Ponzi payments that purported to pay investment returns to other victims.
From 1995 though June 2010, when he ran the Ponzi scheme, Mitchell collected approximately $15 million from about 150 retired individuals. Many of the victims lost the vast majority or all of their retirement savings. Mitchell previously agreed that he caused his victims to lose approximately $6 million, but with new information presented by authorities, Mitchell has agreed to pay more than $7 million in restitution.
Mitchell has agreed to make his initial appearance in United States District Court on April 21.
The case against Mitchell is the result of an investigation by the United States Postal Inspection Service.
Last year, the United States Securities and Exchange Commission filed suit against Mitchell and his companies, obtaining a injunction and an order freezing his assets (see: http://www.sec.gov/litigation/litreleases/2010/lr21535.htm).
Release No. 11-055
Mortgage Settlement Information
Individuals who believe that they may have been victims of lending discrimination by Countrywide and have questions about the settlement may email the Department of Justice at email@example.com .