brentwood Financial Adviser Michael J. park Sentenced to 96 Months for Investment Fraud Ponzi Scheme
Michael J. Park, former Brentwood financial advisor and owner of Park Capital Management Group (“PCMG”), was sentenced yesterday by United States District Court Judge Aleta Trauger to 96 months in prison, announced Jerry E. Martin, United States Attorney for the Middle District of Tennessee. Joining Martin in the announcement were Amy S. Hess, Special Agent in Charge, Memphis Division of the Federal Bureau of Investigation (FBI); Martin P. Phanco, Inspector in Charge, United States Postal Inspection Service; Mark Gwyn, Director, Tennessee Bureau of Investigation (TBI) and Ricky Watson, Brentwood Police Chief.
At the hearing, Park admitted to operating an elaborate Ponzi Scheme to defraud investors who deposited funds with PCMG for investment in brokered stocks and other marketable securities, and stated to the Court that “I was a criminal just like the victims said. There is nothing they said that isn't true.” Before passing sentence, Judge Trauger heard statements from several victims who described the financial destruction caused by Park’s Ponzi scheme.
“Large cases like these are very serious, in particular for the investors," said U.S. Attorney Martin. “Mr. Park repeatedly encouraged people to invest by falsely promising inflated returns on their money, but instead, the investors lost their savings as part of an elaborate Ponzi scheme. In cases like these, a lot of people have invested money they can't afford to lose, particularly in hard economic times. The United States Attorney’s Office will diligently and aggressively prosecute the perpetrators of such schemes.”
As part of the scheme, Park convinced his broker-dealer clients to become clients of PCMG, and to transfer money to PCMG accounts that purportedly were to be managed personally by Park. As an inducement for clients to invest in PCMG, Park promised investors that he would generate annualized returns on investment of between 10% and 28%. Despite Park’s representations to investors, it was never his intention to invest the client funds he solicited. Instead, as Park admitted during testimony at sentencing, he used the money placed with PCMG to subsidize a lavish lifestyle that included expensive homes, cars, and country club membership, as well as expensive shopping trips in which he spent thousands of dollars on hotels and Armani clothes.
"The FBI is committed to working with our regulatory and law enforcement partners to aggressively investigate financial crimes and protect investor confidence," said FBI Memphis Division Special Agent in Charge Amy S. Hess.
“U.S. Postal Inspectors are responsible for protecting the sanctity of the nation's mail system,” said Martin D. Phanco, Inspector in Charge, Atlanta Division. “When allegations are made that the U.S. mail has been used to violate this trust, it’s our job as postal inspectors to restore America’s confidence in the integrity of its postal system and help bring the violators to justice.”
Brentwood Police Chief Ricky Watson stated: “I would like to commend the law enforcement agencies for their efforts in this case. They worked tirelessly after the Brentwood Police Department made contact and filed a complaint against this individual. Law enforcement efforts like these will help victims living in Brentwood and the surrounding area receive some justice, and hopefully some of their assets.”
During his February 2009 plea hearing, Park admitted that he made false representations to investors that their PCMG investment accounts were profitable and earning inflated returns on investments. He also stated that he and another individual fabricated documents designed to deceive investors into believing that their funds were being actively traded and managed, and that he was generating and meeting the significant growth expectations he had promised. The fictitious investment documents included stock purchase confirmations, account statements, summaries of investments, IRS Form 1099's, and invoices for account maintenance fees and commissions.
To further assure investors of the validity and safety of their investments, Park’s office manager caused the seal of the Securities Investor Protection Corporation (“SIPC”) to be placed on fictitious PCMG stock purchase confirmations and quarterly investment statements that were regularly provided to investors. In fact, PCMG was not a member of SIPC, and SIPC provided no protection for PCMG investors.
Park admitted that between September 2001 and June 26, 2008, he solicited and persuaded investors to invest funds in excess of $7,000,000 in PCMG investment accounts. Park admitted that he never purchased or traded securities for clients who invested funds with PCMG, and that the PCMG “managed accounts” existed only on paper.
This case was investigated by the FBI, the United States Postal Inspection Service, the Tennessee Bureau of Investigation, and the IRS. The United States was represented by Assistant United States Attorney John K. Webb.
Stop Medicare Fraud
The U.S. Department of Health and Human Services (HHS) and U.S. Department of Justice (DOJ) are working together to help eliminate fraud and investigate fraudulent Medicare and Medicaid operators who are cheating the system.