TN Financial Advisor Charged in TARP-Related Ponzi Scheme

”This week, criminal charges were brought against a Tennessee financial advisor who allegedly tried to cash in on the federal banking bailout.

Gordon B. Grigg is accused of running a Ponzi scheme worth millions of dollars. The scheme promised investors that their investments would go into debt backed by the federal government’s rescue program, otherwise known as the Troubled Asset Relief Program. Grigg was a self-described financial coach who ran an investment company called ProTrust Management Group. The company had attracted 60 investors since 1990.

According to the federal complaint, filed in the U.S. District Court in Nashville, Grigg convinced investors to put their money into so-called ”TARP-guaranteed debt” programs with a 12.5% interest rate, thereby swindling them out of $5 million. None of that money actually came from TARP funds, however.

A spokesperson for the Treasury Department said in a statement,”There is no such thing as TARP-guaranteed debt.”

TARP’s special inspector general, Neal Barofsky, said that his office intends to prosecute those who commit fraud in the name of the bailout, even if there has not been any loss of taxpayer money. The Treasury Department has put extensive protective measures into place, in order to ensure that the program is not defrauded by criminal activity.

Barofsky disclosed this week that, in addition to the Grigg case, there are nearly 20 other cases being investigated for potential criminal wrongdoing. Each of these may somehow be linked to the bailout measure. The complaint against Grigg is the first instance of criminal charges being brought in a bailout-related investigation.

Mark Pickrell, an attorney for Grigg, announced that his client was looking into a possible plea agreement, under which he would plead guilty to four counts of mail fraud and four counts of wire fraud.

Investors who were duped by Grigg believed that he had connections to several major Wall Street firms, including Goldman Sachs Group Inc., Morgan Stanley, and Berkshire Hathaway, Inc. Included in the complaint are allegation that the financial advisor forged the signatures of executives at well-known national investment firms, and used phony letterheads, in order to fool investors.

Under federal guidelines, Grigg could face up to eight years in prison for this fraud.