Federal Indictment Charges CPA With Securities Fraud
More than 19 investors at or near retirement age lost over $3.6 million
(STL.News) A federal grand jury sitting in Charlotte has returned a criminal indictment charging Mac Wayne Billings, 48, of Raleigh, N.C., with securities fraud, for defrauding at least 19 victims of more than $3.6 million, announced Dena J. King, U.S. Attorney for the Western District of North Carolina.
Robert R. Wells, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division, joins U.S. Attorney King in making today’s announcement.
According to allegations contained in the indictment, between 2012 and 2019, Billings engaged in securities fraud through his company, Alpha Finance Company (ALPHA), located in Sparta, North Carolina. The indictment alleges that Billings fraudulently obtained more than $3.6 million from at least 19 victims throughout Alleghany, Wilkes and Surry Counties, by soliciting them to invest in ALPHA via “debenture notes.” A debenture note is a type of debt instrument typically not backed by a collateral.
As alleged in the indictment, Billings, who is a licensed North Carolina CPA, falsely promised ALPHA’s victim-investors that their money would be used to make high interest consumer loans from which the investors would receive interest payments. Contrary to his promises, Billings used little, if any, of the investors’ funds to make new consumer loans. Rather, Billings used some of the investors’ money to make payments to other investors and to pay himself over $1 million in salary and distributions from ALPHA.
The indictment further alleges that Billings used investment statements, emails and meetings to mislead and deceive victim-investors into believing that ALPHA was a profitable company and that the victims’ investments were safe.
In this regard, Billings allegedly failed to disclose material information concerning ALPHA’s financial and business troubles to victim-investors, including that he had sold or mortgaged most of ALPHA’s assets to hard money lenders. Based on the fraudulent information provided by Billings, many of the victim-investors renewed and/or made additional investments with ALPHA, causing them to incur further financial losses.
Finally, lawsuits brought by the North Carolina Commissioner of Banks (NCCOB) and the North Carolina Attorney General’s Office alleged that Billings failed to comply with North Carolina laws governing consumer finance and retail installment loans.
Billings defaulted on these lawsuits. Consequently, the NCCOB revoked ALPHA’s license due to non-compliance with North Carolina’s Consumer Finance Act. Courts in Alleghany and Wake Counties declared ALPHA’s loan null and void, leaving the investor-victims with no assets to recoup their losses.
The charges contained in the indictment are allegations and the defendant is innocent until proven guilty beyond reasonable doubt in a court of law.
The securities fraud charge carries a maximum prison term of 20 years and a $5 million fine. Billings’ initial appearance will be scheduled in federal court in Charlotte.
In making today’s announcement, U.S. Attorney King commended the FBI for their investigation of the case and thanked the U.S. Securities and Exchange Commission, the North Carolina Commissioner of Banks, and the North Carolina Attorney General’s Office for their cooperation.
Assistant U.S. Attorney Michael E. Savage of the U.S. Attorney’s Office in Charlotte is prosecuting the case.