February 19,2000
A multi-million dollar scam
By Malinda Ruble
Staff Writer
A multi-million dollar investment scam, which ended in South Carolina involving nearly 1,300 investors, has touched Tiffin investors and one local investment representative.
John Lewis, owner of Independent Financial Services at 24 W. Market St., was the sole Seneca County representative for Chemical Trust, an alleged false trust involved in the scam.
"We got information on Chemical Trust a year ago, but I didn't decide to represent them until July 1999 and I didn't start selling until August,'' said Lewis.
Lewis was just one of the 350 representatives who were unknowingly selling trusts created for the scam.
Federal authorities claim that the mastermind of the scam, Virgil Womack, bilked investors across the country for more than $50 million. Authorities have accused Womack of running a scheme to sell high yield guaranteed contracts in U.S. government securities and property under the names of Alliance Trust and Chemical Trust.
Prosecutors said no investments were made and some of the money from new investors was used to pay previous investors small returns.
Womack, his wife and his brother-in-law are charged with conspiracy, wire fraud, mail fraud and money laundering.
"My hindsight has always been terrific, but I try to pick plans for the future. I've been doing this for 15 years,'' said Lewis.
Lewis said he works with about two dozen companies on a regular basis and receives another 5-10 new offers for representation a week.
"I work really hard to provide quality investments and insurance products, but we're not perfect and we make mistakes,'' Lewis said.
Lewis said Chemical Trust had approached his investment firm about two years ago and he rejected the offer. Then a year later, he was approached again and investigated the product. Lewis then agreed to represent the company and passed on the information from the company to the individual investor.
"We present choices and they choose what they feel will fit their needs and budget,'' Lewis said. "We feel bad when something doesn't work out as the clients hoped, but that's part of this business.
"I do the best I can and treat the clients with respect because ultimately it's their money. The information we had came from an elaborate organization and it looked very secure and very safe,'' he said.
Lewis said the investment was touted as a guaranteed investment.
"The surety bond company was suppose to be backing all of this and it was just part of the scheme. There was a lot of disappointment on everyone's part because it (the surety bond company) was used to encourage safety, but it didn't mean anything,'' he said.
Lewis refused to say how many local investors were involved, but said the average investment ranged between $15,000-$25,000, with the minimum investment required to be $10,000. However, a few invested their retirement savings.
"But nobody's lost any money yet. The FBI is doing everything possible they can to recover the money and protect this investment,'' Lewis said. "There will be a return of this, but they're not sure how much or when."
Of the $52 million invested in Chemical or Alliance Trusts, more than $23.5 million has been returned from domestic and offshore accounts, according to Beattie Ashmore, appointed receiver for the case.
Lewis said his clients have been understanding about the situation.
"I know why, after this, why we live in Tiffin &emdash; because of the support. More than half of them have told me they know it didn't have anything to do with us &emdash; it was their choice. They have been terrific,'' he said.
Although Lewis' broker/dealer is reviewing the situation, he said he plans on staying in the financial business.
"I'm willing to try and stay in the financial service business &emdash; one way or another &emdash; to be loyal to my customers. I didn't do anything wrong &emdash; I was trying to get the best possible product that would have paid. I was an investor, too, and I'll be standing in line with the rest of them,'' he said. "We're just really heartfelt for the people and we'll survive as a family and a business, but I feel for them."