Joyce E. Allen
Two East Tennessee women will face a federal trial later this year for their roles in an alleged investment fraud scheme that duped dozens of people out of millions of dollars in East Tennessee and in South Carolina.
Joyce Allen pleaded not guilty to six counts of counterfeit securities and one count of conspiracy to commit money laundering on Monday afternoon in federal court in Knoxville. She owns the Blount County accounting firm "J. Allen & Associates".
Allen's former office manager, Sharon Kay Thomas pleaded guilty to one count of conspiracy to commit money laundering. These are the only criminal charges issued in the case so far. It began with an investigation last fall into a company called Benchmark Capital, Incorporated. Benchmark investors have also filed three civil lawsuits in Knox County against the company.
A dozen Benchmark investors showed up Monday afternoon in U.S. District Court Magistrate Bruce Guyton's courtroom for Allen and Thomas's arraignment. They said they wanted to face the women prosecutors allege stole millions of dollars.
A federal grand jury indicted both women last Wednesday. Their attorneys told the judge they needed more time to review the charges against their clients, since the indictment was sealed until that initial hearing.
"I'll be here anytime that court opens with her in it," said Benchmark investor Kent Burleson.
Burleson, who lives in Maryville, was one of the investors who came to watch Allen and Thomas enter their formal pleas.
The two women are accused of being part of an elaborate scam where they sold what Federal Prosecutor Frank M. Dale, Jr. called "worthless annuity investments" in a civil forfeiture document he filed on July 18, 2012.
Burleson said his life savings are gone, "We're living off my wife's $1,100 a month disability check and around six weeks ago, I took a minimum wage job for extra money."
Burleson told 10News he invested $437,000 with Benchmark through Allen back in 2009. His friend, Maryville resident Joe Bledsoe, invested too. Bledsoe said he has known Allen for 52 years; they grew up and attended elementary school together in Blount County. He said he still can't believe his money is gone.
"In 2007, initially I gave her $420,000 and a couple of my pensions. Then she talked me in to doing my house, another $21,000."
Their indictment against Allen and Thomas is directly lined to a Regions Bank account that prosecutors allege Allen had Thomas open in her name in February. There are only a handful of victims listed in the indictment as losing money in the scam, but the amount totals more than $1.5 million. Burleson and Bledsoe are not named in the indictment against Allen and Thomas, but they told 10News their money was likely in another account that federal agents have already frozen or seized.
That means there are likely dozens of other fraud victims. 10news has already talked to a hand full of them. Each person said they know several other people who invested and are now broke. None of them had any idea there was a problem until a few months ago.
"I did receive a call from the sec in early January. They wouldn't explain what any of it was about...when "CD" Candler committed suicide on March 1st, that's when it all broke open," said Burleson.
"CD" Candler owned Benchmark Capital Incorporated, and ran it out of an office in North Knoxville. Federal court filings show Allen's Blount County accounting business, J. Allen & Associates, represented the investment company for at least the past decade.
The fraud investigation kicked in to high gear this spring when agents raided both offices, and one of Candler's offices in South Carolina.
The civil forfeiture document filed by Dale lists that Federal agents they have seized more than $2 million in cash and other assets tied to the Benchmark scheme. The money was in seven Bank of America Accounts, and a Regions Bank account that Thomas opened for Allen.
Other seized items include a corporate jet in South Carolina; four cars and seven motorcycles in Middle Tennessee, and a trailer. The document reads that Federal agents also plan to seize a 50-foot yacht, and a houseboat, in East Tennessee.
"We had retirement planned. Travel, not gonna happen," said Burleson.
And while Burleson and Bledsoe have serious doubts about getting a cent of their money back. Both men are confident justice will be on their side.
The trial for both women is set to begin on September 25 in front of Judge Thomas A. Varlan.
Two women accused in an investment fraud scheme that duped dozens of people out of tens of thousands of dollars, pleaded not guilty in federal court on Monday.
Joyce E. Allen, of Louisville, the owner of the Blount County accounting firm J. Allen & Associates, pleaded not guilty to six counts of counterfeit securities and 1 count of conspiracy to commit money laundering.
Sharon Thomas, of Knoxville, pleaded not guilty to 1 count of conspiracy to commit money laundering
The arrests come after a multi-agency federal investigation into Knoxville-based Benchmark Capital, Inc. Earlier this year, the Internal Revenue Service-Criminal Investigation Division (IRS-CID) notified Benchmark's investors that they could be "a possible victim of a fraudulent investment scheme."
Benchmark was owned by Charles "C.D." Candler, who committed suicide on March 1. That was days before IRS, FBI, and U.S. Postal Service agents raided Benchmark's Knoxville office, and another office in Greenville, SC.
Several investment companies, including Cornerstone Mortgage and Southern Bankers, both based in Greenville, SC, used Benchmark's services. The IRS-CID letter that was sent to dozens of Benchmark's investors across the southeast listed Allen's accounting firm, J. Allen & Associates, as a representative of Benchmark.