News Releases
PONZI FRAUDSTER PLEADS GUILTY
May 12, 2005
FOR IMMEDIATE RELEASE
David E. Nahmias,
United States Attorney for the Northern District of Georgia, and Gregory
Jones, Special Agent in Charge, Federal Bureau of Investigation, announce
that THOMAS E. MCMURRAIN, 37, formerly of Atlanta, Georgia, pleaded guilty
today to four counts of a federal indictment on charges of mail fraud
and wire fraud. According to Nahmias and the documents and information
presented in court:
In September 1997, THOMAS MCMURRAIN, a former securities dealer, created
a personally held company called “Emergency One Cash Card, Inc.”
(“EOCC”). The business purpose of the company was to make short
term (2-4 weeks) loans ($300-500) to low income borrowers at high interest
rates (22-25% per month), using automobile titles as collateral. MCMURRAIN
began his business with one store front operation at Tower Place in the
Buckhead area of Atlanta. Eventually, MCMURRAIN expanded his business
to a number of storefront operations in Buford, Smyrna, and Decatur and
created a holding company called “Emergency One Holding Corporation,”
headquartered in Buckhead. (“EOHC”). McMURRAIN admitted to creating
a “boiler room” telephone operation called “American Call
Center,” (“ACC”), so borrowers could borrow money telephonically.
Over time, MCMURRAIN hired 10-20 employees to manage the storefronts and
administer business operations while he admitted devoting himself to so-called
“rainmaking,” that is, soliciting investors/lenders to invest/lend
monies to EOCC and EOHC.
According to the evidence, MCMURRAIN solicited private wealthy individuals
as investors in his pay day loan operations, often wining and dining them
at expensive Buckhead restaurants - Bones, Ritz Carlton, etc. In November
1999, MCMURRAIN held a formal solicitation/dinner in a private meeting
room at the Ritz Carlton Buckhead. MCMURRAIN also attended investor breakfasts
and attracted potential lenders from those meetings. MCMURRAIN also conducted
open houses at the Buckhead offices of EOHC and the American Call Center
operations.
MCMURRAIN promised potential investors a rate of return on their investment/loan
of between 15-36% A.P.R. (annual percentage rate) which is much higher
than what was otherwise available. MCMURRAIN gave prospective lenders/investors
a pamphlet/prospectus advising them that their funds would be used only
for working capital, payday loans, general operations and to create additional
storefronts. MCMURRAIN told the investors that the business purpose of
the company was to make short term (2-4 weeks) loans ($300-500) to low
income borrowers at high interest rates (22-25% per month), using automobile
titles as collateral.
Between 1997 and the end of October 2000, MCMURRAIN obtained over $9,000,000
from 80 investors. In the end, the vast majority of the investors received
only monthly interest payments which totaled $1,600,000 over 1997-2000.
MCMURRAIN only paid back about $200,000 in principal. The remaining investors
never received their principal back.
MCMURRAIN never disclosed to investors that his pay day loan operations
were running at a loss. Nor did he disclose that he was using their monies
to invest in any other non-pay day loan operations, including loans totaling
$700,000 to other MCMURRAIN’s companies, as well as uncollateralized
loans to friends and acquaintances without collateral. Additionally, MCMURRAIN
did not disclose to lenders that he spent and lost $600,000 of their monies
on personal day trading and expended another $700,000 on personal life
style purchases.
In late 2000, MCMURRAIN’S pay day operations declared bankruptcy.
Shortly thereafter, MCMURRAIN and his immediate family fled the United
States to Central America. In September 2004, Panamanian authorities apprehended
MCMURRAIN on a provisional arrest warrant from the United States government
and he was returned from Panama in November 2004.
MCMURRAIN could receive a maximum sentence of 20 years in prison and a
fine of up to $1,000,000. Sentencing is scheduled for August 9, 2005,
at 10:30 a.m., before United States District Judge Willis B. Hunt.
This case is being investigated by Special Agents of the Federal Bureau
of Investigation.
Assistant United States Attorney David Leta is prosecuting the case.
For further information please contact David E. Nahmias, United States
Attorney or Gentry Shelnutt, through Patrick Crosby, Public Affairs Officer,
U.S. Attorney's Office, at (404) 581-6016. The Internet address for the
HomePage for the U.S. Attorney's Office for the Northern District of Georgia
is www.usdoj.gov/usao/gan.