News and Press Releases

Man Who Defrauded Nevada Residents in Promissory Note Scheme Pleads Guilty in Florida

October 21, 2003

Las Vegas, Nev. -  Daniel G. Bogden, United States Attorney for the District of Nevada, announces that a man who sold unregistered securities in the form of nine-month promissory notes to victims in Nevada, Florida, Alabama, Arizona, California, Georgia, Indiana, Oklahoma, and Pennsylvania, has pleaded guilty in the United States District Court in Tampa, Florida, to Conspiracy to Commit Securities and Mail Fraud, and substantive Securities Fraud charges. JAMES HOYLE McCARN, age 65, a resident of Tampa, Florida, waived Indictment by a federal grand jury and pleaded guilty on Friday, October 17, 2003, to a two-count Information covering criminal conduct which occurred throughout the United States, including Florida and Nevada. McCARN's securities fraud scheme is believed to have resulted in losses to investors in the amount of $49,687,208.

According to the court records, JAMES HOYLE McCARN resided in Tampa, Florida, where he served as the President, owner and/or director of three business entities: McCarn's Allstate Finance, Inc., d/b/a Allstate Finance; McCarn Enterprises, Inc.; and Century Bay Enterprises, Inc. From approximately August 1995 through October 7, 2002, McCARN and others conspired to commit securities and mail fraud through the sale of unregistered securities in the form of nine-month promissory notes. In order to get individuals to invest in the promissory notes, McCARN and his co-conspirators distributed fraudulent information to potential investors via the United States mail, interstate carriers, and direct sales presentations. The victims invested anywhere from $25,000 to $668,000, in the promissory notes. For example, one Las Vegas resident purchased a $50,000 promissory note and a Reno resident purchased a $25,000 promissory note. McCARN and his co-conspirators distributed materials which falsely suggested that all company operations, including the sale of the promissory notes, were subject to regulatory scrutiny and periodic audits by the Florida Department of Banking and Finance.

The defendant also falsely represented that the investors' funds were safe because they were backed by insured automobile loans and would only be used for secure investments such as very productive loan portfolios. Investors were also told that their principal investments were guaranteed. The materials failed to state that McCARN and McCarn's Allstate Finance, Inc. had been ordered to cease and desist selling unregistered securities by the states of Nevada, Florida, Alabama, Arizona, California, Georgia, Indiana, Oklahoma, and Pennsylvania. As the scheme progressed, the Nevada Secretary of State Securities Division issued its Final Cease and Desist Order against McCARN and McCarn's Allstate Finance on February 21, 2002.

McCARN faces up to five years of imprisonment and a $250,000 fine on the Conspiracy charge, and up to ten years of imprisonment and a $1,000,000 fine on the Securities Fraud charge. The actual sentence will be dictated by the United States Sentencing Guidelines, which take into account a number of factors, and will be imposed in the discretion of the Court. Restitution to the victims of offenses is mandatory under Title 18, United States Code, Sections 3663A(a) and (b), and McCARN agreed to forfeit certain properties gained from the fraud, including cash, stocks, bonds, certificates of deposit, personal property, and real estate.

The prosecution is the result of an investigation by the Nevada Secretary of State Securities Division and the Federal Bureau of Investigation, as part of the District of Nevada Corporate and Securities Fraud Task Force, comprised of federal, state and local law enforcement agencies, including the Federal Bureau of Investigation, Internal Revenue Service Criminal Investigation, the Securities and Exchange Commission, the Postal Inspection Service, Nevada Secretary of State Securities Division, and the Las Vegas Metropolitan Police Department, Fraud Division. The mission of the Task Force is to identify and target for prosecution individuals and entities engaged in securities, commodities, and other corporate fraud within the state of Nevada. The case is being prosecuted by Assistant United States Attorney Justin J. Roberts.

Federal or state securities laws require brokers, advisers, and their firms to be licensed or registered, and to make important information public. It is up to you to find that information and use it to protect your investment dollars. Investors may check on the background of a broker/dealer firm or individual through the National Association of Securities Dealers (NASD) Public Disclosure Program by calling their hotline at (800) 289-9999 (Monday through Friday, 8 a.m. to 8 p.m., ET) or visiting their website at You may also call the Nevada Secretary of State Securities Division at (800) 758-6440 for a background check. Additionally, tips for checking out Brokers and Advisors is available at the Securities and Exchange Commission website at

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