PLANO, TEXAS, MAN SENTENCED TO FIVE YEARS IN FEDERAL PRISON AND ORDERED TO PAY NEARLY $13 MILLION IN RESTITUTION FOR DEFRAUDING INVESTORS
Defendant’s Father to be Sentenced in January for Role in the Fraud
DALLAS — Michael Wallens, Jr., 31, of Plano, Texas, has been sentenced by U.S. District Judge Barbara M. G. Lynn to 60 months in federal prison and ordered to pay nearly $13 million in restitution for his role in an investment fraud scheme. Judge Lynn ordered that he surrender to the Bureau of Prisons on January 3, 2012. Wallens, Jr., and his father, Michael Wallens, Sr., 53, of Nantucket, Massachusetts, each pleaded guilty last year to one count of securities fraud. Wallens, Sr., who remains on bond, is scheduled to be sentenced by U.S. District Judge Sam A. Lindsay on January 17, 2012. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas (NDTX).
According to documents filed in the case, Michael Wallens, Jr., and his father, along with indicted defendant Adley Husni Abdulwahab, 36, offered and sold to investors Collateral Secured Debt Obligations (CDSOs), issued by W Financial Group (WFG). CDSOs are promissory notes and a type of security also known as an investment contract. The three received approximately $17 million in proceeds from the sale of these CDSOs to approximately 180 investors.
Adley Husni Abdulwahab has been indicted in the NDTX on one count of conspiracy and five counts of securities fraud. He has not yet been brought to the NDTX to face charges because he is in custody in Richmond, Virginia, where he was recently sentenced to 60 years in federal prison for his role in another securities fraud scheme. The government expects Abdulwahab to appear in court in Dallas in the near future to face the charges in the pending indictment related to WFG.
In the Wallens’ case, offering materials fraudulently represented that investors’ money would be held in cash, government or corporate AAA bonds, qualified receivables or insured notes. The men employed investors’ money in various ways that they did not disclose to the investors. Acting through WFG, they used investor money to purchase Michael Wallens, Sr.’s used car dealership, its automobile inventory and the dealership’s accounts receivables. They also used investor money to invest in residential lots, a home building company and a power company. When Wallens Jr. became aware that the offering materials didn’t accurately disclose the true facts, he did not take the necessary steps to end the false representations in the offering materials, and he did not contact investors to disclose the true facts. In fact, they took investor money as their own personal compensation.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
The cases are being investigated by the FBI and the FDIC Office of Inspector General, with substantial assistance from the Enforcement Division staff of the Securities and Exchange Commission. Assistant U.S. Attorney Alan M. Buie is in charge of the prosecution.
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