And the Fraud Begins – Gordon Grigg and his firm, ProTrust Management Inc. Charged with Securities Fraud – I Shall Call Him “Mini Madoff”

In tough economic times fraud will rise!  And with government funds flooding the markets to stimulate the economy, there is no doubt that some will see this as an opportunity to – well take advantage of an unregulated environment.  That seems to the be case with Gordon Grigg of Nashville and his firm, ProTrust Management Inc.

According to the Associated Press – “Federal regulators on Wednesday charged an investment adviser with securities fraud, saying he bilked clients of at least $6.5 million in the first scheme using the government’s $700 billion financial bailout program as a front to lure investments.”

Need, opportunity and rationalization – these are the three components of fraud – white collar crime.  And while a person is considered innocent until proven innocent, it would seem that there is enough evidence to cause the Securities and Exchange Commission to obtain a court order freezing the assets of Gordon Grigg of Nashville and his firm, ProTrust Management Inc.

It would seem that based on the information thus far that Grigg could be called “Mini Madoff.”  No he might not have yet created a Ponzi scheme, but it does seem it was headed in that direction.

The Associated Press reports:

Grigg represents himself as a financial planner and investment adviser, but neither he nor his firm is registered with the SEC or a state regulator, the agency said in its civil lawsuit filed in federal court in Nashville. The SEC said that Grigg, who obtained control over funds of at least 27 clients, falsely claimed to have invested their money in securities described as “private placements,” creating phony account statements.

BE AWARE:

One of the first indications of fraud is when the investment advisor says – he/she has something that is “private” something that no one else has – something that is special.  Madoff had something special – and now it seems so did Grigg.  Only in both cases it appears that neither was true.

According to the SEC, Grigg began falsely claiming that his firm could invest client funds in government-guaranteed commercial paper and bank debt as part of the federal TARP program. His claims also included that he had partnerships and other business relationships with several leading U.S. investment firms.

Grigg and his firm “preyed upon investors’ desire for safety by claiming associations with reputable investment firms and the government’s TARP program,” Katherine Addleman, regional director of the SEC’s Atlanta office, said in a statement. “Investors should carefully check any purported affiliations. In this case, not only were such claims false, but there is in fact no program in which investors can buy debt guaranteed by the TARP program.”

THE VICTIMS:

As reported in the Charolotte Observer – “Davidson resident Steve Wieland has prayed with Gordon Grigg, invited the former Charlotte resident into his home and trusted him enough to let Grigg’s company invest his life savings.  Wieland, 59, a disabled former pilot who flew for US Airways for 25 years, said he lost $252,000, the bulk of his life savings.

“You read about this happening in the newspaper. But when it happens to you, you go, ‘Oh my God, how do I recover,’” Wieland said. “I can’t. I’m done.”

Grigg’s alleged fraud started in 2003 and according to reports – ProTrust also was subject to a cease and desist order in North Dakota in 2006 for allegedly selling nonexistent securities, records show.

THE PIT – THAT HOLE THAT INVESTORS FALL INTO (AND DON’T RECOVER FROM):

As a fraud prevention expert and business ethics speaker, I am often asked how is it that people get suckered into investments like this?  I wish I could say it was difficult.  But from experience that cost me time in prison – I have to admit it is easy.   More times that not the scammed investors fall into what I have referred to as the PIT.

But here is what Mr. Wieland had to say, “I gave my money to a ‘friend’ instead of doing my research,” Wieland said. “Never do that. I don’t want anybody else to lose any more money.”

P – first there is the “promise” that the investor can get something that is special – something that the average person can’t get.  That “something special” is the allure of a better return – or something that gives one a chance at the gold at the end of the rainbow.  The fraudster plays on that emotional need.

I – second there is the “illusion.” In Grigg’s case – he claimed to have “private placements.”  That was supported by false and fraudulent account statements reflecting client ownership of the non-existent securities.  The false information is part of the illusion.  When you see it on paper or on the web in a fake account, you are lulled into believing it’s truth.

T – the final part is the all important aspect of “trust.” As stated in the Charlotte Observer article – “Steve Wieland has prayed with Gordon Grigg, invited the former Charlotte resident into his home and trusted him enough to let Grigg’s company invest his life savings.”  Ah…there’s that word – TRUST. Bernie Madoff had it, Gordon Grigg had it and so did I.  And in each case the abuse of trust was a key factor in a fraud taking place.

THIS STORY ISN’T OVER:

There is more to this story and likely many more victims.  I feel for them and hope that this writing might alert others to the importance of due diligence when investing.  Grigg, if convicted, will spend time in Federal Prison where he’ll have ample opportunity to think about this choices and the consequences that follow.  As I speak nationwide on ethics and fraud prevention – the first words out of my mouth are – “Every choice has a consequence.”

YOUR COMMENTS ARE WELCOME!

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14 Responses to And the Fraud Begins – Gordon Grigg and his firm, ProTrust Management Inc. Charged with Securities Fraud – I Shall Call Him “Mini Madoff”

  1. Another Charlotte Victim says:

    I am also one of the 27 clients. I was completely blind sided by the series of events and left in shock. I have “known” Gordon since 2005 and thought he was a good Christian man. Apparently, that is not the case. It will be interesting to see where all of our money has gone and if we can recover any of it.

  2. Vivien says:

    I am a single gran’ma, 66 years old, in 2008 was retiring, butmy retirement was wiped out in an instant by a Ponzi Scheme operated by Andres Pimstein’s companies, Bottom LIne, MIami, FL, and Summit Trading LLC, North Carolina, The sentencing is schedule for March 19 as he very conveniently pleaded guilty. I contacted two attorneys but apparently they feel that there’s no money so wouldn’t take the case on contingency and of course, I have no money to hire one. The SEC says that because there were no securities involve and was not a member of the SEC that we cannot get restitution, like the Madoff victims. WHAT CAN I DO? YOU KNOW ABOUT THESE THINGS, IS THERE SOME KIND OF HELP OUT THERE FOR VICTIMS LIKE ME AND OTHERS INVOLVED? Feel Totally powerless!

  3. […] that action wasn’t enough for Gordon Grigg.   In a story I wrote several weeks back (read here) about an SEC investigation into the finacial actions of Gordon Grigg and ProTrust Financial, I […]

  4. Let me start out by saying I am so sorry to hear of your losses. I’ve spoken with thousands of victims over the years but it never gets any easier to hear just how much this type of fraud impacts not only the victims but their entire families.

    Mr. Gallagher is correct in his statement that fraud increases in times like these. In fact, there are now approximately 2 ponzi schemes being uncovered each week across the country and that’s just what’s being uncovered. I estimate that it’s probably only the tip of the iceberg but only time will tell.

    In regards to recovery statistics, although there have been instances that receivers find a substantial amount (>25%), in most cases, 5% is considered a successful recovery effort. As much as I hate to tell you that, to tell you anything else would be misleading.

    My name is Moira Souza Shiver and I am an advocate for individuals like yourselves. Vivien, although the prospect of recovery through legal means is bleak, there may be some recourse through the tax benefit 165 (c)(2). I do not want to get your hopes up too much as this benefit cannot help everyone, but for those that it does fit, it’s often the best source of recovery available.

    My website (mss165.com) will provide you with information on the deduction and I will be happy to discuss how it works to anyone wanting to know. As I mentioned, I’m a victim’s advocate so do not charge individuals a fee for my time. I am compensated much as Mr. Gallagher, through speaking engagements and/or donations to my company.

  5. Sharon says:

    I too have prayed with Gordon Grigg. As he preyed on me…My loss is pennies compared to others but it has devastated me. At a dark time in my life ending a 25 year marriage; Gordon Grigg won my confidence and stole my money. I am now even more lost and more devastated. I haven’t the money to pursue my loss through legal avenues. Now I pray for justice…please God give us justice.

  6. another wieland says:

    I hope Grigg has ALL of his assets taken away and distributed to all os his clients that he stole from.. so much so that he has to live on poverty row… in a house next to drug dealers and crack whores… and Madoff… WITH HIS ENTIRE FAMILY AND SIBLINGS!

  7. nonono says:

    What, “another wieland”, why would he live there with his family? His daughter Caroline is my close friend and she didn’t do anything! She is so sweet. Let’s not blame others, k?

  8. John SImpson says:

    Well you should also check in on how he preyed on models and photographers. He molested many models and would lure them into doing lewd photo shoots. He would tell the girls he had a professional photographer waiting to do a shoot of the girls, but they had to audition for him first. He would see who was wiling to take the clothes off for him and once he got their clothes off and had the photos taken he would seel the photos black market overseas for tons of money. He used a fake australian accent and then would switch to a North Carolina accent depending on who he was talking to. The guy needs mental help. He is psychotic. He even suggested that he was involved with Jessica simpson and said he had photos of jessica simpson having sex which he sold for over a million dollars overseas. He is a demented human being. Hey preys on peoples dreams.

    • wieland says:

      I too would like to go into further investigation about Grigg’s model placement agency…..any way to track it down online????? what about Romanian rock star wife, Mila [really not Romanian and really not a rock star]. She touted a business to help women ” present themselves” and even posted online comments about how wonderful Grigg has been in securing her benefits.

    • David Dickson says:

      I am marrying one of those “models” you refer to and can tell you FIRSTHAND– everything you have said is TRUE. My fiancee is scarred for life and dealing with this matter has been the single biggest problem we have encountered in our relationship. FURTHERMORE– I have even shared this information WITH his wife and yet she continues to deny that it could be true. These events I reference happened from March 2008-November 2008– DURING his CURRENT marriage and while his wife Mila was FOUR MONTHS PREGNANT with their first child!!!! Although what she did was deplorable and abhorrent it pales in comparison to the demon that led her into this side of the business. We will deal with this issue within ourselves but he should NOT be allowed to escape prison because he is “reformed” as indeed he is not and DOES pose a threat to the community.

    • no flash says:

      He still is trying and now his family for defense fund for appeal on harsh sentense. I had to return to this web site to refresh my distain for his behavior. I have known this man for several decades and have witnessed his privialaged life style. He has never been needy and has always gotten everything he needed and more. So much for him being abused or neglected. He had all the charm, mental capacity and looks to do whatever he would have wanted to do the right way but chose to use these talents in a very deviant manner. I am so sorry about the young ladies that fell into this trap and the victims who lost their entire savings. Needless to say he is not getting a dime out of me.

  9. TJ says:

    Do a little further looking into ol’ Gordon and you will see that his exploits extend beyond investment fraud. Gordon was apparently doing more than praying with another man’s wife and produced an illegitimate son he didn’t bother to claim until there was a profit motive in it for him. Good Christian??? HA!!!!

  10. Wow says:

    The model scam is true. It happened to me for a few months in late 2006. He found me on MySpace. He initially got my attention by telling me how my son and I would be great for print ads… my son was never the target, I was. On two different occasions, he booked hotel rooms for me. The first time my boyfriend came along for protection, so Gordon was on his best behavior. The second time (a few hours farther from my house) Gordon had booked “1” room with 2 beds in it. I should’ve left then. He did everything he could to make me take nude photos. I guess after I turned that down, and turned his sexual advances down, he had enough of me and moved on to the next victim. He was dating Mila at that time and he carried condoms in his travel bag. He also claimed that he wrote that song Michael Buble sings, “I want to go home,” and Christina Aguilara was a client of his. I just found this site. Nice to vent…

  11. no flash says:

    Update if anyone still looks at this site concerning Mr. Grigg. He is appealing “illegal sentencing” to the Middle District US Court this week. Only advantage to him getting out early is to reduce the burden on the taxpayers of this country. Only thing left for him is to be come another TV evanglist along with his trophy bride 1/2 his age. I can see the “lovely” couple now on bill board on I 40 with the caption> Send us your rich, well healed, and privileged and we will give you unrest.

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