(STL.News) – A criminal bill of indictment has been unsealed in federal court in Asheville following the arrest of Mark Nicholas Pyatt in North Dakota, announced Andrew Murray, U.S. Attorney for the Western District of North Carolina. The indictment charges the 40-year-old former resident of Haywood County with securities fraud, wire fraud, investment adviser fraud, and money laundering.
Ronnie Martinez, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Charlotte; Robert Schurmeier, Director of the North Carolina State Bureau of Investigation; and Sheriff Greg Christopher of the Haywood County Sheriff’s Office join U.S. Attorney Murray in making today’s announcement.
According to allegations contained in the indictment, beginning as early as October 2017, and continuing through at least February 2019, Pyatt, often using the alias Daniel G. Randolph, solicited friends and acquaintances to invest their money in a “communal account,” or “fund,” held by his company, Winston Reed Investments, LLC (WRI). As alleged in the indictment, Pyatt represented to his victim-investors that he had made significant amounts of money through his own investing and day trading activities, and that he wanted to invest the victims’ money using a similar strategy so that they could experience the same wealth that he enjoyed.
The indictment alleges that, in order to induce the victims to part with their money, Pyatt made a number of false and fraudulent representations. Pyatt told the investors that he would make trades with the investors’ money on a daily basis, that he would be trading futures and forex, and that he would specialize in energy-related stocks. Pyatt also falsely promised large returns on investments, assuring victims that the “low average expected return on investments” would be 15% per month, with a goal of a return of 100% in three to four months. Pyatt represented to his victims that he would receive a fee for WRI’s services of just 10% of all gains, and that he would not charge his investors any fees if he did not make a profit.
According to the allegations in the indictment, contrary to the promises he made to his victim-investors, Pyatt simply stole the vast majority of the investors’ money. The indictment alleges that Pyatt misappropriated over $100,000 to pay for personal expenses, including jewelry, groceries, cigars, and a Chevrolet Corvette. Pyatt also withdrew tens of thousands of dollars in cash, and made several Ponzi-style payments to his investors, falsely implying that the returned funds were trading profits.
As alleged in the indictment, Pyatt perpetuated the fraud by making misrepresentations to victim-investors about the fund’s performance. For example, for months, Pyatt regularly provided his investors with false updates that purported to describe his trading activity and the considerable positive returns he was earning on their investments. Then, in February 2019, after reporting substantial monthly gains to his investors for more than a year, Pyatt allegedly notified his investors by email that a “complete and catastrophic” loss had occurred, and that their money was gone. Pyatt allegedly claimed that he was investigating the loss with the assistance of a forensics firm, and he told his investors that the loss was due to a technical oversight or failure by the brokerage firm holding the investment account. According to the indictment, all of these representations were false; in reality, the money was gone because Pyatt spent it.
The indictment further alleges that, during at least a substantial portion of the scheme, Pyatt resided in Haywood County and targeted local victims. In total, the indictment alleges that Pyatt stole at least $218,000 from his victim investors, many of whom were at, or near, retirement age.
Pyatt had his initial appearance in the U.S. District Court in the District of North Dakota, and will have a court appearance in the Western District of North Carolina at a later date.
The wire fraud charge carries a maximum prison term of 20 years and a maximum fine that is the greatest of $250,000 or twice the gross gain or gross loss. The securities fraud charge carries a maximum prison term of 20 years and a maximum fine of $5,000,000. The maximum penalty for the investment adviser fraud charge is five years in prison and a $10,000 fine. The money laundering charge carries a maximum prison term of 10 years and a maximum fine that is the greater of $250,000 or twice the amount of criminally derived property involved in the transaction.
All charges contained in the indictment are allegations. The defendant is innocent until proven guilty beyond reasonable doubt in a court of law.
Today, the Commodity Futures Trading Commission (CFTC) and the U.S. Securities & Exchange Commission (SEC) also announced separate civil actions filed with the U.S. District Court in the Western District of North Carolina against WRI and Pyatt.
In making today’s announcement, U.S. Attorney Murray commended the Haywood County Sheriff’s Office, the SBI, and HSI for their aid in the investigation of the criminal case, and thanked the CFTC and SEC for their continued cooperation.
Assistant U.S. Attorney Daniel Bradley, of the U.S. Attorney’s Office in Asheville, is in charge of the prosecution.