1of3FILE — Sam Bankman-Fried, the chief executive of FTX, during a panel at Crypto Bahamas conference in Nassau, Bahamas, on April 27, 2022. The dramatic collapse of the crypto exchange continues to reverberate throughout the industry. (Erika P. Rodriguez/The New York Times)ERIKA P. RODRIGUEZ/NYT
Travis Iles, the state's securities commissioner, has plenty of details, however. Gunn was passing around documents showing that he had a purchase agreement for a bar called J Durham. He needed partners to put in $75,000 in return for half the company, according to the commission’s order.
“The executed Business Sale Offer and Acceptance Agreement is a forgery,” the commission explained in court papers. “Respondent’s representations are false, they have not purchased J Durham and are not the current owners of J Durham.”
The commission goes on to explain that Gunn has a checkered past. A federal court in Idaho convicted him after he pleaded guilty to identity fraud in 2010. He was sentenced to 61 months in prison and four years of supervised release, which ended in early 2022.
While under supervision in April 2020, Gunn was charged with selling alcohol in Lubbock without a license, a case that remains pending. If you run into him, and he mentions something about a music festival, keep walking, Iles advises.
Some people think you cannot go wrong investing in real estate, but Tommie “Tom” Carter Jr. of Austin proved that you can. He was convicted last month of defrauding more than $1 million from 20 investors.
Carter’s Tristar Equities sold promissory notes guaranteeing an annual yield ranging from 9.25 percent to 11.25 percent. Neither Carter nor the notes were registered with the state's Securities Board, which made them illegal. Worse, though, he was using new investor money to pay off early investors, a scam known as a Ponzi scheme.
Carter pleaded guilty to a judge in San Antonio who sentenced him to 40 years in prison and ordered him to repay $830,000. Derrick R. Trussell pleaded no contest to charges he helped Carter and will be under community supervision for the next five years.
Then there is Phillip Carter, who operated Texas Cash Cow Investments in Frisco. Carter allegedly took money from 330 people promising to invest it in real estate but used it for himself. A court ordered him to pay $30 million in restitution and serve 45 years in prison
“Investment scammers prey on trust. They often falsely tout integrity, promote safety and promise security to obtain and misuse the hard-earned money of our fellow Texans,” Iles said.
A truism among con artists is that you cannot scam an honest person, and sometimes that’s true. To draw people in, scammers offer an outsized, guaranteed profit impossible to obtain from standard investments.
Fraudsters rely on the victim’s greed and willingness to exploit an inside track to an investment few others can access. Victims must be willing to invest in something shady.
Thousands of cryptocurrency investments offer extraordinary returns utilizing computer code no one else has. But they are often Ponzi schemes that rely on money from new investors to pay early investors hoping to cash out. The Texas State Securities Board has issued many cease-and-desist orders related to crypto schemes.
Many new scams are twists on old cons inspired by news headlines. The board issued orders in 2022 against a slew of companies promising huge profits from cryptocurrency casinos in the Metaverse after Facebook CEO Mark Zuckerberg touted the online environment as the future of the internet.
Here are a few rules to avoid scams: If you don’t understand it, don’t invest in it. If an investment seems too good to be true, it probably is. If your best friend cocks an eyebrow upon hearing the pitch, walk away quietly. There are no easy roads to riches.
Chris Tomlinson, named 2021 columnist of the year by the Texas Managing Editors, writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter
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