Fraudulent investments aimed at seniors

Published on Tuesday, 10 December 2013 23:21 - Written by KENNETH DEAN kdean@tylerpaper.com

The file in Tony Noakes’ hands contains contracts between his parents and a local estate planner specializing in assisting the elderly and protecting their assets, but 10 months after signing the contracts and giving the estate planner $4,200, nothing has been done. 

Noakes has since learned the estate planner his family trusted, Richard Hicks, 50, was convicted in November for securities fraud, which defrauded local elderly residents out of $1.7 million in a case that the Texas State Securities Board calls a ponzi scheme targeting the elderly. 

“I am mad, upset and plain frustrated with this entire situation. All I want is to make my mom whole and settle this once and for all,” he said.

Speaking with The Investigators, a team consisting of reporters from the Tyler Morning Telegraph and KYTX CBS19, Noakes spoke about his family’s dealings with Hicks and said he took the case to the Mineola Police Department, because after months of trying to communicate with Hicks, his calls have gone unanswered.

Noakes explained how he was referred to Hicks and his company, Elder Advisory Services LLC, to help plan for his parents’ future. Noakes’ father was terminally ill, his mother was dealing with the illness of her husband and Noakes said Hicks used it all to sell himself and his company. 

Since signing a contract 10 months ago, Noakes’ father died.

“It has been a nightmare to say the least. He used the circumstances to his advantage and we were all so worried about dad that we overlooked some obvious signs,” he said.

Noakes said work has been done on behalf of his parents, but pointed out none of the documents had a signature of an attorney. These documents included power of attorneys and other documents requiring an attorney to be involved. 

“There is an attorney’s name on the documents, but no signature,” Noakes said. “Now I have learned the attorney, Tyler attorney Peter Milne, had no knowledge of this contract and that Hicks was using his name without permission.”

After learning about Hicks’ legal troubles, Noakes said he asked for the money back, but months of no communication led to a decision to turn his parents’ case over to police. 

“He has answered a few emails, but that is the extent of our communication. He wrote saying he would pay us $100 a month until this was repaid, but I don’t have a lot of faith in him so I took it to the police,” he said.

However, late last week Captain Joyce Box of the Mineola Police Department  said her agency has forwarded the case to the Texas Bar Association, because Hicks was practicing law without a license, which he was already under a 2001 Texas Supreme Court injunction not to practice law. 

Noakes is afraid there may be more victims of Hicks’ fraudulent practices. 

“Who knows how many more are out there,” he said.

The Investigators went to Hicks’ home on Troup Highway and asked him if he would care to answer a few questions about the case, but he refused to talk and quickly shut his door. 

As for the earlier case, Hicks entered a guilty plea in the 241st District Court in November to charges of fraudulently selling securities, and his company — Elderly Advisory Services in downtown Tyler — was shut down. 

Hicks was sentenced to 10 years probation, ordered to perform 500 hours of community service and to pay restitution in the amount of $243,686.89 in monthly payments of $2,035.

However, he still faces legal troubles with the U.S. Securities and Exchange Commission as his case has not been settled. 

Kevin Callahan, a SEC spokesman, said the case before the SEC is of a civil nature, but added it has not gone before a judge at this time. Callahan refused to speak more on the case, citing an ongoing investigation. 

 

NATIONAL NOTE 

Jacksonville resident, 86-year-old Doris Finley, was one of 10 victims in East Texas who combined lost $1.7 million to Hicks and his investments in a company based in Utah named National Note.

Mrs. Finley and her caretaker Charles Denman said she was critically ill and doctors were not sure she would pull through.

“Her family members thought they were doing the right thing by trying to invest some of her money for maximum returns so she would be provided for in the event that she lived through her illness,” Denman said. “They had no idea this was a scam.”

Mrs. Finley said she met with Hicks after she recovered and her impression was he was a nice enough man, but underneath he was “nothing more than a scam artist.”

According to court documents and filings with the SEC and the Texas State Securities Board, Hicks has never been registered with the state to sell securities in Texas, but he sold securities to elderly residents in order to “protect their assets.”

“Yet he sold National Note’s investments as part of a supposed strategy to protect the assets of his clients and assist them in qualifying for Medicaid benefits and other costs associated with long-term care,” the Texas State Securities Board bulletin stated. 

The SEC documents show National Note claimed to purchase, manage and sell real property and also buy loans backed by real property interests.  

But in 2010 the company could no longer make payments to the 600 investors nationwide and the SEC stepped in under an emergency action alleging the company was in fact a ponzi scheme. Total losses are projected at $100 million.

The SEC states in its documents, Hicks began recommending National Note and the company’s promise of a 12 percent return to his clients and, even after learning the company could not make its payments in 2010, still signed up several clients to invest with National Note. 

The SEC also contends Hicks was not well educated in accreditation, but filled out his clients’ paperwork to invest with National Note. 

Hicks, according to the SEC, willingly violated law when he acted as a broker without being licensed, sold unregistered securities and performed with fraudulent conduct.

He also not only charged his clients a fee for setting up their financial plan but also took in more than $33,000 in commissions from National Note.

Claire Mock, Texas State Bar Public Affairs Administrator for the Chief Disciplinary Counsel, said the 2001 injuction came from an order after Hicks was sued for practicing law without a license. 

 Hicks was sued by Milne, and Hicks voluntarily signed an affidavit stating he used Milne’s name without the attorney’s knowledge. 

Hicks had contracted with Milne on some cases, but Milne found out earlier this year that Hicks was using his name as the attorney looking over more than 100 clients’ financial plans. 

Hicks stated in the affidavit he engaged in providing unauthorized legal services to at least 150 clients, including Medicaid pre-planning and qualification and other legal services. 

“In these instances, I used Milne’s standard Medicaid contract without permission or authority, provided legal services in violation of the UPL (Unauthorized Practice of Law Committee) injunction and received over $140,000 in fees which I did not remit to Milne. I admit that I defrauded and deceived Milne and the clients,” Hicks stated in the affidavit filed in the 114th District Court. 

The court granted Milne a permanent injuction and damages of $296,903.75 plus attorney costs of more than $9,400. 

Milne’s attorney, Chad Parker, said his client was another of Hicks’ victims. 

“Pete was taken advantage of and is also a victim in this ordeal. He did not even know these people existed until everything started coming to a head,” he said. 

 

PRACTICE CAUTION 

Bob Elder of the Texas State Securities Board said elderly fraud is very common in the state and comes in many forms including oil and gas fraud.

“Older investors may be easier marks because some may have a diminished ability to make decisions and or investments. Some are frustrated with the low yields from banks, savings and loans and credit unions. And then there is the fear they will outlive their money, becoming a burden on their families or falling into the cracks,” he said.

Elder said families should practice caution when investing money and never believe someone claiming big returns.

“These are usually an indicator there is something wrong,” he said.

Elder also said before investing, families should do research on the people or companies they are investing with — and doing so could save a lot of trouble.

Noakes agreed, saying, “If I had only Googled this guy’s name I would’ve seen his past and we would have never given him any money,” he said. 

Noakes said he is back at square one with dealing with his mom’s finances, but it has cost him thousands of dollars in traveling back and forth from California and hours spent working on his mother’s behalf. 

“My sister and I just want this over and for mom to be made whole again. This is all we ever really wanted,” he said. 

Mrs. Finley said the $150,000 of her money invested with Hicks and National Note has yet to be recovered.

“I hope I can get at least some of it back, but I don’t believe I will,” she said.

The SEC case into National Note and Hicks both remain open.