PRESS RELEASE
U.S. Department of Justice Office of the United States Attorney Middle District of Tennessee
Suite A-961 Telephone (615) 736-5151 110 9th Avenue South Fax (615) 736-5323 Nashville, Tennessee 37203-3870
December 18, 2008 FOR IMMEDIATE RELEASE CONTACT: Edward M. Yarbrough United States Attorney John K. Webb Deputy Criminal Chief Assistant U.S. Attorney (615) 736-5151
MAIL AND WIRE FRAUD CHARGES FILED AGAINST BRENTWOOD FINANCIAL ADVISER MICHAEL J. PARK Nashville, TN - December 18, 2008 - United States Attorney Edward M. Yarbrough; My Harrison, Special Agent in Charge, Memphis Division of the Federal Bureau of Investigation (FBI); Martin P. Phanco, Inspector in Charge, United States Postal Inspection Service; Mark Gwyn, Director, Tennessee Bureau of Investigation and Ricky Watson, Brentwood Police Chief, announced today the filing of a federal felony criminal Information against Michael J. Park, former Brentwood financial advisor and owner of Park Capital Management Group (“PCMG”). The felony Information, filed earlier today in the United States District Court for the Middle District of Tennessee in Nashville, charged Park with three counts of mail fraud, in violation of Title 18, United States Code, Section 1341; and one count of wire fraud, in violation of Title 18, United States Code, Section 1343. The charges all were based on Park’s alleged role in embezzling more than $9,000,000 in client investment funds. Park, made an initial appearance this morning before Magistrate Judge John Bryant, and was released pending further proceedings. Page 1 of 4
According to the Information, as early as September, 2001, Park began operating a scheme to defraud investors who deposited funds with PCMG for investment in brokered stocks and other marketable securities. As part of the scheme, the Information alleges, Park convinced his broker-dealer clients to become clients of PCMG, and to transfer money to PCMG accounts that purportedly were to be managed personally by Park. As an inducement for clients to invest in PCMG, according to the Information, Park promised investors that he would generate annualized returns on investment of between 10% and 28%. Despite Park’s representations to investors, the Information alleges, it was never his intention to invest the client funds he solicited. Instead, Park allegedly used the money placed with PCMG to subsidize a lavish lifestyle and to capitalize and operate a new mortgage lending business that he had started known as PCMG Lending. According to the Information, Park made representations to investors that their PCMG investment accounts were profitable and earning inflated returns on investment. In order to conceal the scheme from investors and to encourage future investment in PCMG, Park and another individual allegedly fabricated documents designed to deceive investors into believing that their funds were being actively traded and managed, and that Park was generating and meeting the significant growth expectations he had promised. The fictitious investment documents allegedly included stock purchase confirmations, account statements, summaries of investments, IRS Form 1099's, and invoices for account maintenance fees and commissions. In addition to the fabricated investment documents, the Information alleges, Park made false representations to investors that their investments were safe. To further assure investors of the validity and safety of their investments, Park and the other Individual allegedly caused the seal of the Securities Investor Protection Corporation (“SIPC”) to be placed on fictitious PCMG stock purchase
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confirmations and quarterly investment statements that were regularly provided to investors. In fact, according to the information, PCMG was not a member of SIPC, and SIPC provided no protection for PCMG investors. In order to keep track of changes in fictitious PCMG investor accounts, the Information alleges, the other Individual created and maintained a Microsoft Excel spreadsheet in which the Individual recorded each deposit or withdrawal of client funds, any individual requests by investors for purchase or sale of specific securities, and any requests for a report on the status of an individual PCMG account. If a client requested a withdrawal from a PCMG investment account, according to the information, the withdrawal amount would be covered by transferring money from newly solicited or existing client funds. Between September 2001 and June 26, 2008, according to the Information, Park solicited and persuaded approximately 28 investors to invest funds in excess of $9,000,000 in PCMG investment accounts. Allegedly, Park never purchased or traded securities for clients who invested funds with PCMG, and the PCMG “managed accounts” existed only on paper. “Cases like these are very large and very serious, in particular for the investors," United States Attorney Edward M. Yarbrough said. “According to the Information, Park repeatedly encouraged people to invest by falsely promising inflated returns on their money, but instead, the investors lost their savings as part of an elaborate Ponzi scheme. In cases like these, a lot of people have invested money they can't afford to lose, particularly in hard economic times. The United States Attorney’s Office will diligently and aggressively prosecute the perpetrators of such schemes.” "The FBI is committed to working with our regulatory and law enforcement partners to protect investor confidence in the United States financial markets," said FBI Memphis Division Special Agent in Charge My Harrison.
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Brentwood Police Chief Ricky Watson stated: “I would like to commend the following law enforcement agencies for their efforts in this case: the United States Attorney’s Office, the FBI, the Postal Inspection Service, TBI, and the SEC. These agencies worked tirelessly after the Brentwood Police Department made contact and filed a complaint against this individual. Law enforcement efforts like these will help victims living in Brentwood and the surrounding area receive some justice, and hopefully some of their assets, when they fall victim to fraud schemes like the one alleged here.” The charges in the Information were brought following a coordinated investigation conducted by agents from the Federal Bureau of Investigation, the United States Postal Inspection Service, the Tennessee Bureau of Investigation and the Brentwood Police Department. Assistant United States Attorney John K. Webb, Deputy Criminal Chief, is prosecuting the case for the United States.
# # # # # An Information constitutes only an allegation and is not evidence of guilt. A charged defendant is presumed innocent and is entitled to a jury trial at which the Government would bear the burden of proof beyond a reasonable doubt as to each count of the information.
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