FINRA Bars Brokers in Multi-Million-Dollar Ponzi Schemes

WASHINGTON--(Business Wire)--
The Financial Industry Regulatory Authority (FINRA) announced today that in
separate enforcement actions, it has permanently barred two brokers for running
multi-million-dollar Ponzi schemes that victimized a wide range of investors -
including elderly individuals, mentally and physically impaired individuals,
church members and even family friends.

FINRA barred Oren Eugene Sullivan, Jr., of Rock Hill, SC, for misappropriating
approximately $3.7 million in a decades-long Ponzi scheme involving more than 30
clients - including 15 widows, two Alzheimer`s victims and an individual with
developmental impairments. At least eight of the affected clients were over 80
years old and another four were over 70 years of age. Numerous victims
considered Sullivan a close family friend.

FINRA also barred William Walter Spencer, Sr., of Franklin, TN, who "borrowed"
nearly $2 million from elderly members of his church and from customers of his
employing broker-dealer, Wiley Bros. - Aintree Capital, LLC.

"The protection of seniors and other vulnerable investors from unscrupulous
brokers remains one of FINRA`s highest priorities, and we will continue to
identify and expel those within our jurisdiction who take unfair advantage of
their clients," said Susan L. Merrill, FINRA Executive Vice President and Chief
of Enforcement. "The misconduct of these brokers was nothing short of egregious
- and their financial exploitation of the elderly, the infirm and people who
considered them trusted friends shocks the conscience."

In the case of Sullivan, who was a broker for NYLife Securities, FINRA found
that from late 1988 to October 2008, Sullivan obtained money for personal use by
leading his victims to falsely believe that they were investing in promissory
notes or other legitimate financial products issued by NYLife or its affiliates.
Most of the victims had already invested in one or more NYLife products sold by
Sullivan. In exchange for the money he took from customers, Sullivan usually
provided a one-page "note" stating the amount of principal and promising an
annual interest rate, which ranged from 6 percent to 12 percent. Rather than
disclosing that Sullivan was borrowing the money for his own personal use, the
notes stated that the borrower was an entity named "IFP." "IFP" was a term
Sullivan created that stood for "insurance financial product" or "insurance
financial professional," but no valid corporation or other legal entity named
"IFP" ever existed.

As part of his deception, Sullivan asked clients to pay for the "notes" with
personal checks made out to "IFP-NYL" or "IFP-NYLife." Notwithstanding the fact
that the checks did not list Sullivan as the payee, his bank, a well-known
institution with millions of customers and thousands of branches, allowed him to
deposit the proceeds of the checks into his own account. Sullivan then used the
money for personal expenses, including the purchase of cars for his children and
the payment of his children`s tuition at private colleges. Eventually, Sullivan
found it necessary to take money from newer victims to meet the obligations owed
to earlier victims.

In total, Sullivan obtained approximately $3.7 million pursuant to his scheme
and owed approximately $2.2 million at the time he was caught. NYLife has
reimbursed the $2.2 million to the affected customers.

Sullivan`s scheme came to light when one customer and her daughter discovered
that he had misappropriated $10,000 given to him for the purchase of variable
annuities for the benefit of her great-grandchildren. Instead of investing the
money as promised, Sullivan used the funds to pay for his son`s wedding. Over a
period of approximately three years, the customer had never received a statement
showing the purchase or the investment performance of the variable annuities
despite numerous requests. Ultimately, the customer and her daughter visited
Sullivan at his office and demanded to see the statements. In response, Sullivan
attempted to give the customer an interest-bearing note for the $10,000. He also
attempted to avoid being reported to his superiors by giving the customer a
letter he fabricated and fraudulently claimed to have been written by his firm`s
compliance officers. The letter falsely stated that he had already been
reprimanded for his misappropriation. The customer`s daughter was suspicious of
the letter and contacted Sullivan`s superiors, who then commenced an internal
investigation and discovered Sullivan`s vast Ponzi scheme.

In the second case, from December 1997 to May 2008, Spencer induced investors to
invest in promissory notes falsely promising rates of return 10 to 12 percent
higher than rates available on traditional investments. In all, there were 234
such transactions and 80 percent of the investors were elderly members of his
church community who had previously invested their funds in certificates of
deposit or savings accounts. FINRA found that Spencer knew at the time that he
procured the loans that he did not have the liquid assets or ongoing income
necessary to pay the interest and return the principal to the investors. Spencer
failed to repay many of the individuals as promised and used the proceeds of new
loans to satisfy existing loans.

All of the individuals from whom Spencer borrowed funds were of modest means.
For example, one customer was a 62-year-old school bus driver for special needs
children who loaned Spencer $60,000 after her husband`s death. Spencer used the
loan to repay other customers. Another customer faced the threat of foreclosure
on his home due to Spencer`s failure to repay the $12,250 loan he made. To avert
the pending foreclosure, Spencer used funds from another customer to make the
payment owed. An 80-year-old customer loaned Spencer $20,500. She later needed
to make repairs to her home, but was unable to do so because of Spencer`s
failure to repay the principal and interest due.

In settling these matters, neither Spencer nor Sullivan admitted nor denied the
charges, but consented to the entry of FINRA`s findings.

Investors can obtain more information about, and the disciplinary record of, any
FINRA-registered broker or brokerage firm by using FINRA`s BrokerCheck. FINRA
makes BrokerCheck available at no charge. In 2008, members of the public used
this service to conduct 11.6 million reviews of broker or firm records.
Investors can access BrokerCheck at www.finra.org/brokercheck or by calling
(800) 289-9999.

FINRA, the Financial Industry Regulatory Authority, is the largest independent
regulator for all securities firms doing business in the United States. FINRA is
dedicated to investor protection and market integrity through comprehensive
regulation. FINRA touches virtually every aspect of the securities business -
from registering and educating all industry participants to examining securities
firms; writing and enforcing rules and the federal securities laws; informing
and educating the investing public; providing trade reporting and other industry
utilities; and administering the largest dispute resolution forum for investors
and firms.

For more information, please visit our Web site at www.finra.org.

Financial Industry Regulatory Authority (FINRA)
Nancy Condon, 202-728-8379
or
Herb Perone, 202-728-8464

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