FOR IMMEDIATE RELEASE:
WEDNESDAY - February 6, 2008
RALEIGH JURY CONVICTS TWO IN $70 MILLION
RETIREMENT INVESTMENT SCHEME;
THREE OTHERS PREVIOUSLY PLED GUILTY
RALEIGH - United States Attorney George E. B. Holding announced today that a jury in Raleigh, North Carolina convicted SCOTT B. HOLLENBECK, 53, of Orlando, Florida and LAURINDA HOLOHAN, 63, of Concord, Ohio of conspiracy and 12 of 14 counts charging mail fraud. BARRY C. MALONEY, 65, of Bethesda, Maryland was acquitted on all counts. The jury returned its verdict today following a four-week trial in federal court before Senior United States District Judge W. Earl Britt.
Three others had been charged and previously pled guilty in this case, United States v. Lomas et al., 5:07-CR-117-BR: MICHAEL A. LOMAS, age unknown, of Pasadena, California; SUSAN KNIGHT, 48, of Eastlake, Ohio; and ARTHUR J. ANDERSON, JR., 49, of Raleigh, North Carolina. A seventh defendant, MICHAEL L. YOUNG, 61, is a fugitive from justice and is believed to be residing in the United Arab Emirates.
HOLLENBECK and HOLOHAN were involved with Mobile Billboards of America, Inc., which purported to be a legitimate “business opportunity” for investors seeking monthly income during retirement. In exchange for investments in increments of $20,000, investors were promised they would receive “guaranteed” monthly checks based on a return of 13.49% and the return of their entire investment at the end of seven years. Investors were told their $20,000 was used to purchase billboards on the sides of trucks, and that advertising revenue from those billboards was used to make the monthly payments.
In fact, Mobile Billboards was operated as a fraudulent Ponzi scheme, where investments by new investors were used to make payments to previous investors, and to enrich the defendants. In September, 2004, the United States Securities and Exchange Commission sued the company, and it was discovered that Mobile Billboards had almost no advertising revenue compared with the number of investments sold. Further, it was discovered that there were no known billboards operating on the sides of trucks; instead, thousands of unassembled billboard parts were found in a warehouse in Brevard, North Carolina.
Approximately $55 million was taken in through the Mobile Billboards fraud scheme; another $16 million was taken in through a previous, related scheme under the name “National Payphone Corporation.” Investors were solicited by a network of “sales agents” – typically insurance agents.
Defendant HOLLENBECK was an insurance agent and leading salesman of Mobile Billboards, responsible for the sales of approximately $10 million of Mobile Billboards investments, primarily in and around Kernersville, North Carolina. HOLLENBECK received over $2 million in commissions as the result of his sales. HOLLENBECK operated under various corporate names, including “Webb Group” and “Franklin Asset Exchange.”
Defendant HOLOHAN was responsible for the extensive banking transactions that made the scheme possible. She conducted these transactions out of the basement of her home in Newbury, Ohio.
Defendant MALONEY served as Mobile Billboards’ primary attorney.
The three defendants who previously pled guilty – LOMAS, KNIGHT, and ANDERSON – also played important roles in Mobile Billboards. LOMAS, who pled guilty to mail fraud, was the leader of the scheme, and personally received more proceeds from the crime than any other participant, including a Manhattan apartment, a Long Beach, California penthouse, rare collectibles, and luxury automobiles.
KNIGHT and ANDERSON pled guilty to the conspiracy to commit mail fraud. KNIGHT was the bookkeeper for Mobile Billboards. ANDERSON was another North Carolina-based salesman for Mobile Billboards. ANDERSON was an insurance agent who worked on Mobile Billboards’ behalf under the corporate names “Legacy Estate Concepts LLC” and “Arthur Anderson Retirement Planning, Inc.”
“This sophisticated fraud scheme caused terrible harm to elderly investors in North Carolina and elsewhere – investors who had played by the rules during their working years and were seeking financial security in retirement.” said United States Attorney George E. B. Holding. “Citizens must remember, if an investment seems too good to be true, it almost certainly is.”
Investigation of the case, which is ongoing, is being conducted by the United States Postal Inspection Service, the Federal Bureau of Investigation, and the North Carolina Department of State, Securities Division. Assistant United States Attorneys Clay C. Wheeler and Jason H. Cowley handled the prosecution for the United States.
News releases are available on the U. S. Attorney’s web page at www.usdoj.gov/usao/nce within 48 hours of release.