Arkansas Agent Sought for Alleged Investment Scam

January 5, 2009

An Arkansas insurance agent accused of bilking retiree investors out of tens of thousands of dollars and converting the money to his own use is being sought by the Arkansas Securities Department.

Terry Mitchell of Greenbrier allegedly raised $92,000 from 10 investors, though more victims may emerge, officials said on Dec. 31, 2008. In March, Mitchell agreed to buy back investments totaling $43,000 and pay 6 percent interest to four investors, and pay a $10,000 fine to the department. Mitchell signed another order that expanded the repayment. But Mitchell did not make the payments and he has since vanished, Assistant Securities Commissioner Theodore Holder said.

Some of the victims are in their 80s. The securities department wants anyone knowing where Mitchell is to call its office.

A phone number listed for Mitchell in Greenbrier had been disconnected. There is no indication he has an attorney.

“If anybody has seen him, or if we have more victims, we want to know,” Holder said.

Mitchell, who did business under the name Advantage Financial Services, signed a consent order in March and subsequently an amended version in which he acknowledged converting investors’ money to his own use and promised to pay back investors. By signing the orders, he did not admit to or deny the agency’s accusations.

The complaint was amended again on Dec. 30 to elevate the totals to 10 victims and $92,000, though Holder said he expects there are more victims who have not yet come forward.

Holder said Mitchell worked for years as an insurance agent and that nine of the 10 victims were among clients to whom he sold annuities or other products. One victim met Mitchell at a dinner seminar.

“He abused that trust and took advantage of people who don’t have time to replace such a loss,” Holder said.

Holder said Mitchell is in his 50s; records show a 57-year-old Terry Mitchell residing in Greenbrier. The Arkansas Insurance Department’s Web site shows Mitchell’s insurance license is revoked.

In May, the department amended the complaint to add victims who invested with him, bringing the total to seven victims and $72,000.

The department said Mitchell told victims wildly different stories about how their money would be invested, from a construction project in Europe, to a loan pool for poor farmers in Malaysia. The department said the offerings included an investment in a Ponzi scheme called People in Profit Systems (PIPS), operated by a British citizen in Malaysia.

A Ponzi scheme involves investors being promised great return on their money, but their cash is not invested. The money goes to the leader of the scheme. New money is sometimes used to pay early investors to keep the scheme from collapsing.

The investigation, headed by Securities Commissioner A. Heath Abshure, found that “Mitchell never invested any of the funds in a manner that could produce the returns promised and that Mitchell converted the funds to his own use,” according to a department release.

Mitchell, who was an independent insurance agent and has no securities registration, promised some investors that they would double their money every six months.

Holder said the matter could be referred to a prosecutor but investment-related cases are generally considered civil matters. He said the department’s priority, whenever possible, is getting the investors their money back.

Anyone with information on Mitchell is asked to call Investigator Gretchen Hall at 501-324-8680.

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