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The Voice of Business,
Industry & the Professions Since 1942
North Carolina's largest
business group proudly serves as the state chamber of commerce
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November 2004 State
Government
Government Gumshoes
Shut Down a Ponzi Scheme
The
N.C. Secretary of State’s office, normally one of the quiet backwaters
of state government, is basking in the spotlight for helping crack an
unusual Ponzi scheme that bilked hundreds of investors nationwide out of
tens of millions of dollars. Even the U.S. Securities and Exchange
Commission is offering its kudos for the gumshoe work done here to stop
the so-called mobile billboard scam.
Here’s how the scam worked: For $20,000, investors were told they
could get in on the ground floor of a major new marketing innovation
being sold by a Deleware company called Mobile Billboards of America.
For their $20,000, investors received a billboard frame that attached to
the sides of a truck. Mobile Billboards said it would help investors
sell advertising on the trucks and that it would line up investors with
a leasing company that would actually operate the business. There was
even a guarantee that Mobile Billboards would buy back the equipment at
full price at the end of seven years. It supposedly was a no-risk
investment with a very high rate of return.
The trouble was, the mobile billboards attracted little if any actual
advertising. In classic Ponzi sceme fashion, money from new investors
was parceled out to earlier ones as their royalties.
Mobile Billboards began signing up investors in North Carolina last
spring, and investigators in the Secretary of State’s office soon were
receiving calls attempting to verify the credentials of an underwriting
company, Reserve Guaranty, that supposedly was standing behind the
buy-back offer.
The investigators learned that none of the parties was registered to do
business in the state and most of the agents selling the securities
weren’t licensed. The Secretary of State’s office issued cease and
desist orders to Mobile Billboards and four of its agents.
Things were quiet for a while, but in late September the state
investigators learned that Mobile Billboards was back in business and
had duped more investors. It issued 23 more cease and desist orders to
individuals selling the product. Investigators also learned that Mobile
Billboards was active in several other states, and turned the evidence
over to SEC.
On Sept. 23, the SEC filed a complaint in federal district court in
Georgia against Mobile Billboards of America, three related businesses
and two individuals, Michael Lomas and Michael Young, who were described
as the brains behind the business. The complaint alleges that Lomas and
Young duped more than 700 investors out of $60.5 million.
DOT Unveils 25-Year Highway Plan: There’s good news and bad
about the state Board of Transportation’s new 25-year plan for
maintaining and improving North Carolina’s highways. The good news is
that the mammoth plan is finally a reality after four years of work, and
that DOT has identified $55 billion in available revenues to fund the
highway, rail and mass transportation projects. The $55 billion includes
a 10 percent increase in available revenues for maintenance of existing
roadways.
The bad news is that the long self-examination of North Carolina’s
highway needs concludes that the state ought to spend $85 billion on
maintaining and improving its transportation system. That means that DOT
will only be able to meet two-thirds of the state’s 25-year
transportation needs at its current funding levels, regardless of how
the department’s resources are allocated.
“We have a responsibility to the citizens of North Carolina to make
sure that we are directing our resources to the areas of highest
priority,” said Board of Transportation member Nancy Dunn, who chaired
the long-range planning committee charged with overseeing the
development of the new plan.
NCDOT has been working to develop the Statewide Transportation Plan
since September 2000, and the plan will be updated every four years to
ensure it continues to meet the state’s changing needs.
— Steve Tuttle
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