Two Ponzi Scheme Operators Plead Guilty In Massive Insurance and Securities Fraud Prosecution
Lee Cash and Joey O’Kelly pled guilty today to charges arising out of a Ponzi scheme operated by the two men that focused on defrauding elderly individuals who thought they were purchasing insurance policies and securities. The two men entered guilty pleas before Judge Horace Johnson today in Walton Superior Court after charges were brought by Attorney General Thurbert Baker and Alcovy District Attorney Ken Wynne. The investigation into Cash and Sons Insurance was initiated by the Georgia Insurance Commissioners Office in May 2004 after an elderly couple reported that they had paid for insurance policies which had been cancelled for non payment. The execution of a search warrant and subsequent investigation revealed that Lee Cash had collected monies far in excess of the policies purchased by the couple, resulting in overpayments by the couple totalling $65,679.36 for the years 2002 and 2003. Two elderly sisters had also been overcharged for insurance for the years 2001-2003, resulting in overpayments by the sisters totalling $52,836.77 for those years.
Evidence obtained through a search warrant also revealed that Cash and Sons had been selling promisssory notes to their insurance customers. The company had never properly registered the notes as securities or registered their employees as securites salespersons with the Secretary of State’s Office. The subsequent joint investigation by the Secretary of State’s Office and Insurance Commissioner’s Office revealed over 29 different families who had invested over $2.6 million with the company. The promissory notes were being sold by Lee Cash, who was the owner of the business, and by Joey O’Kelley, an employee.
Representations were made by Cash and O'Kelley to the investors that their investments were secure and that the investors money would be returned upon request. Investors were told that the money would be invested in high risk insurance companies and that Cash and Sons was doing well. A financial investigation by the Georgia Bureau of Investigation High Technology Unit revealed that the investor’s money was in fact being used to pay salaries and to run Cash and Sons Insurance, which was in financial trouble. The company was operating a "Ponzi scheme" whereby old investers were paid a return on their investment out of monies solicited from new investors, not from any actual profit on their investment. Lee Cash was also using investor money to buy property in his own name, not in the name of Cash and Sons. These properties and the monies invested in them were ultimately lost when Lee Cash filed personal bankruptcy.
Prior to Indictment, Lee Cash faced administrative sanctions by the Secretary of State’s Office, which oversees the regulation of securities in Georgia, and Cash paid $124,671.92 in restitution to the victims. Lee Cash pled guilty to 5 counts of Insurance Fraud, 28 counts of Theft by Taking, and 37 counts of Violation of the Georgia Securities Act. He received a sentence of 8 years in prison, followed by 22 years of probation. After his release from prison and while on probation, he has been ordered to pay $2,449,992.92 in restitution to the victims. As a special condition of his probation, Cash is prohibited from working in the insurance or securities industry.
Joey OKelley pled guilty to 27 counts of Theft by Taking, and 57 counts of Violation of the Georgia Securities Act. He received a five year prison sentence, followed by 25 years on probation. After his release from prison and while on probation, he has been ordered to pay $2,201,087.04 in restitution to the victims. O’Kelley paid $65,000.00 in restitution to the victims at the time of sentencing by the Walton County Superior Court. As a special condition of his probation, O'Kelley is prohibited from working in the insurance or securities industry.
The case was jointly prosecuted by the Offices of Attorney General Thurbert Baker and Walton County District Attorney Ken Wynne, Jr. The case was jointly investigated by Special Agents Candler Dozier, Jr. and Sherry Mowell of the State of Georgia Department of Insurance and by Senior Securities Investigators Denise Williams and Duane Fry of the Georgia Secretary of State. The financial investigation was done by Robert Balsalm, a forensic auditor with the Georgia Bureau of Inestigation.