Spitzer Announces 28 Wny Victims Of Investment Scam To Receive $1.25 Million
State Attorney General Spitzer announced today that 28 victims of an investment scam run by two Amherst men will receive $1.25 million in restitution. The victims will receive their checks this week.
On average, the victims, the majority of whom are elderly, will receive 87% of the money they lost in one of the largest investment frauds in Western New York history.
The money is being paid by the Metropolitan Life Insurance Company, which employed the two men as agents.
"I'm delighted that we've been able to recover this money, which in many instances represents people's life savings, and return to them some peace of mind," said Spitzer. "I want to commend Met Life for being a responsible corporate citizen and making good for the actions of two of its employees who went bad."
On August 2nd, Dennis McNerny, 53 of Williamsville, and Michael Ferguson, 42, of East Amherst are scheduled to be tried in State Supreme Court on a 35 count indictment which includes charges of Grand Larceny, Securities Fraud, and Scheme to Defraud.
All told, the pair are charged with defrauding a total of 45 investors out of $5 million between 1993-98. The restitution being paid for by Met Life covers the period of time that the defendants worked for the company.
Joining Spitzer at the news conference today were three victims- 91 year old Lillian LaGrant of Alden, who lost $198,000 and will receive $142,000 in restitution, Robert Kinder, 57 of Lockport, who lost $140,000 and will receive $122,000, and Neil McMillan, 83 and his wife Catherine, 80, of Cheektowaga who lost $10,000 and will receive $8,700.
McNerney was a sales representative for Met Life in the Buffalo area from December of 1990 until September of 1995. He continued to recruit victims after he left the company. Ferguson was a Met Life agent from October of 1988 until June of 1999.
Met Life agreed to create the $1.25 million restitution fund after it was informed by the Attorney General that McNerney began clandestinely soliciting investors while he was employed by the company. Ferguson, also without Met Life's knowledge or permission, received commissions from McNerney for soliciting investors for him after McNerney left Met Life.
The indictment alleges that McNerney, the owner of World Wide Capital Funding, (WWCF) bought accounts receivable at a discount from companies in exchange for an up front fee. In order to purchase these accounts, McNerney allegedly raised capital by offering investors WWCF "joint venture agreements," which he represented as "fully secured," "insured," and "guaranteed."
In fact, Spitzer's investigation revealed that these deals were not fully secured, guaranteed or insured, but instead were extremely high-risk. WWCF would often invest in longshot start-up companies, or firms with troubled financial histories.
Many of the victims were elderly, unsophisticated investors looking for a conservative vehicle for their retirement funds that would generate a greater return than their bank accounts, but would be much safer than the stock market. On average, they were paid 10% or 11% on their investments.
It is alleged that McNerney raised over $5 million through his "joint venture agreements" with investors. He lost much of the money in his highly questionable investments.
"McNerny and Ferguson calculatingly preyed on unsophisticated investors with their only motivation being greed," said the Attorney General. "We will vigorously prosecute them. I want to assure the other investors that we will do all we can to try to get their money back as well."
Spitzer offered these tips to consumers who are approached to make investments -
- Other than U.S. government bonds, there is no such thing as a "guaranteed" or "no risk" investment;
- If anyone claims to be selling an investment on behalf of a bank or insurance company, call the company and ask for the manager to see whether it's true;
- Check with the Attorney General's office to see whether the person selling a security, as well as the security itself, is registered in New York State.