Two businessmen in Charlotte, North Carolina, were accused by the SEC and DOJ of stealing millions of dollars from investors, including their own family members.
Marlin Hershey and Dana Bradley allegedly encouraged dozens of people to invest in several securities that are unregistered by the SEC, according to US Attorney Dena King.
The businessmen are accused of marketing the securities through the company Performance Holdings, as well as several LLCs they and others are in control of. These facts were released last week in a criminal indictment that was issued by a grand jury in Charlotte in US District Court.
Hershey And Bradley Collected Millions in Illegal Commissions
The men allegedly collected millions in illegal commissions from selling the unregistered securities, and they hid these commissions from investors, according to federal documents. The undisclosed commissions were 10% of the investor’s funds and are illegal if the investor doesn’t know about them.
The SEC requires that all commissions paid for investment transactions must be disclosed to the investors and the public.
Also, marketing materials gave investors the opposite impression that no one would receive commissions associated with the investments. The businessmen also took illegal and undisclosed management fees from their various companies.
Next, they didn’t report negative investment results in investor status reports, the indictment reads. And in 2019, investors were told that the projects they had invested in were in financial straits and could not pay their investors.
They also hid the reality of the investments from investors by making loans to various businesses so they could provide investment returns as promised. They used the money from investors to pay off those loans. They also used money from new investors to pay returns to older investors.
Lavish, Waterfront Homes
The businessmen reside in one of the most high-priced parts of Charlotte, the mansion-lined Lake Norman.
Hershey and his spouse live in a $1.7 million home, and Bradley lives in a $795,000 home on the lake. The scheme ran from 2009 through 2021, but the victims are not named.
The businessmen have had an up and down investment history, the indictment reads, but they didn’t inform their investors.
The indictment states that the SEC charged Hershey 20 years ago with insider trading, but the indictment doesn’t state what the outcome of the charge was.
In that case, Hershey told investors that he received a tip from a Lendingtree.com manager who said the company was going to be bought for tens of millions of dollars. Hershey purchased stock before the action took place and sold it a week later, pocketing about $14,000.
Hershey also shared that tip with three co-workers who also bought the stock and made $74,000. Court records show that Hershey did not admit guilt but agreed to give up his $14,000 profit and pay an $88,000 penalty.
Also, in 2018 and 2019, Hershey was fingered in two Colorado indictments because he was an unregistered promoter of promissory notes that a commercial real estate company was selling. The company owner was accused of fraud, but Hershey was not charged, although he got a 10% commission.
Bradley never told investors that he had been sued in a past real estate project for misrepresentation and deceptive business practices.
In the current case, the federal indictment shows the investors mostly live in Pennsylvania. The list includes 22 investors who invested a total of of $3 million.
The wire fraud and mail fraud conspiracy charges and mail fraud charges all carry up to 20-year terms and a fine of $250,000. The securities fraud charge has a possible prison term of 20 years and up to a $5 million fine. The maximum jail term for money laundering is 10 years and a fine of up to $500,000.
If they are convicted on the federal charges, Hershey and Bradley could receive up to 70 years in federal prison. Also, prosecutors say they will attempt to obtain a forfeiture judgment of $7 million from the men.
Additional Money Laundering Cases Resulting In Prison Time
Other federal cases have been prosecuted recently that involve money laundering. One resulted in an 18-month federal prison sentence for Brandon Ross, 33, of Los Angeles. He was found guilty of money laundering conspiracy and is required to pay up to $1.5 million in restitution.
According to the federal plea agreement, Ross and four others worked in a scheme to launder criminal activity proceeds by illegally getting electronic merchandise without paying for it and selling the products to continue the scheme.
As part of the money laundering, Ross convinced three tech companies that he and his co-conspirators were allowed to make purchase agreements and then had the victim companies ship the electronics to others in the conspiracy without being paid.
Next, Ross and his fellow schemers sold the illegal property after receiving it. These illegal transactions were done to hide the location, source, and nature of the illegal transactions.
Additionally, Ross received the illegal money and engaged in wire and bank transfers to various people to conceal the illegal nature of the transactions. He made several deposits of thousands of dollars and had the money transferred to other across the world to hide that they were illegal transactions based on criminal activity.