TDCI Assists FBI in Investigating Chattanooga-based Investor Scheme

Monday, January 23, 2017 | 1:23pm

NASHVILLE – The Tennessee Department of Commerce & Insurance (TDCI) aided the Federal Bureau of Investigation (FBI) and other law enforcement agencies in halting a financial fraud by a formerly licensed insurance agent and annuities broker from Knoxville, Tenn. John Allen Morris, Jr., pleaded guilty to multiple fraud charges in October 2016 , including selling fraudulent annuities to elderly clients.

A federal indictment and plea agreement outline that Morris established fake companies and began selling nonexistent annuities to elderly investors. Morris convinced the investors to surrender legitimate annuities – some of which he had originally brokered – and invest in annuities with one of his fictitious companies in order to receive a higher rate of return. Morris used the investors’ money to pay personal bills for himself and his family, to fund other ventures, and also to make payments to other investors.

“This is the worst kind of insurance fraud that we see where a trusted advisor deliberately misleads consumers for his /her own financial benefit,” said TDCI Assistant Commissioner for Insurance Michael Humphreys.  “There is no place for these types of actions in Tennessee, and we are glad to have worked to bring justice for the victims. This was a team effort.” 

Morris was sentenced on January 13, 2017 to three years imprisonment, five years supervised release, and restitution to victims of $1,194,744. Of that amount, $1,142,636 is to be paid to the eight elderly annuity fraud scam victims (or their heirs). The remaining restitution is payable to victims of Morris’s other frauds, such as credit card scams, bogus Florida condo rentals,  and a scheme whereby he solicited people to invest in the purchase of damaged Lamborghinis which would allegedly be stripped and sold for parts.

“Protecting Tennessee consumers is at the core of everything we do,” said TDCI Assistant Commissioner for Securities Frank Borger-Gilligan. “TDCI’s Financial Services Investigations Unit routinely works in conjunction with agencies like the FBI to investigate and expose financial predators. We encourage Tennesseans to reach out to us if they suspect they have been the victim of fraud.”

If you think that you might be a victim of securities or insurance fraud, or if you would like to file a complaint or speak with an investigator, please contact the Tennessee Securities Division – Financial Services Investigations Unit at (615) 741-5900, or to file a complaint online, please visit https://tn.gov/commerce/article/securities-file-a-complaint.

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