Office of the Attorney General
Attorney General Conway Announces New Indicments In Connection With Alleged Investment Scam
Attorney General Jack Conway and Commonwealth’s Attorney Gail Guiling today announced the indictment of a Todd County man on new charges related to an alleged investment scam. Joseph Martin Pewitt of Elkton was indicted by the Todd County Grand Jury on three counts of selling securities without a license and three counts of selling unregistered securities. All charges are Class D felonies.
The case will be prosecuted by Commonwealth Attorney Gail Guiling’s office. Pewitt was previously indicted by a Logan County Grand Jury on similar charges related to two other victims.
The three victims in Todd County lost more than $290,000 in the scheme. Added to the $200,000 which the Logan County victims lost, Pewitt’s known victims lost more than $490,000 that Pewitt claimed to have invested in “point-of-sale” credit-card terminals and guaranteed them 1% interest on their investment each month.
The Attorney General’s Office of Consumer Protection launched its investigation after being contacted by an attorney who represented two elderly widows in Logan County. The attorney had concerns about an investment his clients had made in TMT Management Group, LLC.
Similar criminal actions against other sellers of TMT Management Group “securities” have been prosecuted by the state Securities Department in Texas. TMT has also been the subject of enforcement actions taken by the federal Securities and Exchange Commision (SEC). The owner of TMT, Edward S. Digges, Jr., and his various companies including TMT Management Group and other individual co-defendants were sued by the SEC in a civil action in a Florida federal court in 2006. According to court papers, the actions of the defendants cost investors more than $22 million. There were approximately 300 investors nationally. A settlement of the SEC’s action was approved by the court, and victims had until May 2008 to apply for compensation from the $1 million available to satisfy claims of fraud at rate of roughly 5% of the amount of loss.
The Attorney General’s investigation is continuing. Consumers wanting to file a complaint or contact the office about the investigation should contact the Attorney General’s Louisville Office at 502-429-7134.
Information about the SEC case and settlement are available at http://www.tmtreceivership.com/
Fraud is always a possibility, even with secured, regulated investments. Before investing, ask tough questions, both of yourself and those who are soliciting your investments. If the answer to any of these questions is "no" — or if the answers are vague or complicated — more than likely the investment being pitched is a fraud.
Is the company I’m investing in registered to sell securities?
Be cautious if the company selling you stock, assets, or partnership units has not registered its securities. Companies that register their securities file prospectuses and annual reports with securities regulators. If a promoter tells you that your investment is "structured" to exempt the securities of the company from registration, you may be dealing with an outfit that’s purposely avoiding contact with regulators.
Is it "too late" if I don’t invest my money now?
Using sales scripts, scam artists create the impression that only a few shares of stock or partnership units are left. They try to convince you that you’ll miss out on a big opportunity if you don’t send them thousands of dollars by overnight courier or wire transfer. Once you give your money to a scam artist, it may be too late to get it back.
Does the investment have a track record?
Claiming that their "opportunity" is similar to those of "hot" entrepreneurs, scam artists often use news stories about the success of legitimate companies as bait. Unfortunately, success stories of other companies in the field are irrelevant for your purposes. Get the track record of the company you’re considering investing in and the background of the people promoting it.
Do I have an independent, knowledgeable, trustworthy person who can advise me?
Get an independent appraisal of the specific asset, business or venture you’re considering. An appraisal offered by the party selling the investment opportunity can be fake. Talk to the previous owners of an asset or a business you’re acquiring for its value history. Discuss all investment ideas or plans with an accountant or an advisor you know and trust.
Do I know who I’m dealing with?
Can you find published information about the company in which you’re investing, proof that the company has registered the securities it is selling with a government agency (if required), or someone you trust who has heard of the company? Have you checked with your state securities agency to see if the promoter or sales person is licensed to sell securities in your state, if required? If not, be cautious. You’re giving your money to strangers.
Checking law enforcement agencies and Better Business Bureaus in the community where promoters are located is prudent, but not fool-proof. It may be too soon for the company’s victims to realize they’ve been defrauded or to have lodged complaints with the authorities. In addition, fraudulent promoters can lie about their name or their business history, or even pay people to be "references."
Did my sales representative tell me the risk of losing my money was high?
Sales representatives should tell you the risk of particular investments. Be particularly suspicious of sales pitches that play down risk or portray written risk disclosures as routine formalities required by the government. Believe the risk disclosures that say you could lose your whole investment. When your money is gone, fraudulent investment promoters often use "risk disclosures" against you.
Do I know when something is too good to be true?
Investing is risky business. Anyone who tells you an investment is likely to turn a profit quickly should have a basis for the claim. Demand written proof of profit projections from independent sources. Be especially wary when someone tells you profits will be big enough to offset the risk of investing.
For more information about wise investment practices