Whiteville man sentenced in investment Ponzi scheme case, ordered to pay over $10M in restitution

Published: Oct. 27, 2023 at 10:27 AM EDT
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WHITEVILLE, N.C. (WECT) - The United States Department of Justice announced on Friday, Oct. 27, that 76-year-old Joseph W. Floyd, IV has been sentenced on charges of “conspiracy to sell and deliver unregistered securities in connection with a multi-million-dollar Ponzi scheme that was operated under the guise of a purported investment program.”

In February, Joseph and his brother, William F. Floyd, Jr., pleaded guilty in the case.

According to the release, Joseph received the following sentence:

  • 42 months in prison
  • Three years on supervised release following the prison sentence
  • $10,646,504 to be paid in restitution

“According to court documents and other information presented in court, the Floyds owned and operated Floyd’s Insurance Agency (FIA), an insurance business based in Whiteville, North Carolina,” the release states. “The Floyds, through FIA, also offered a purported ‘Loan Program’ in which more than 150 individuals and businesses in southeastern North Carolina and elsewhere invested funds in exchange for interest-bearing promissory notes.

“The promissory notes were securities as defined by law and therefore required to be registered with the Securities Exchange Commission (SEC). As part of the registration process, the SEC requires businesses to provide important financial information that allows investors to make informed investment decisions.”

The investment offerings were never registered by the Floyds with the SEC.

“The Loan Program offering was portrayed as a safe and conservative investment, comparable to a traditional money market account or certificate of deposit (CD) but offering higher interest rates that varied from six percent to 10 percent,” the announcement explains. “The promissory notes, which were personally guaranteed by the Floyds, stated that investor principal was repayable within one year. The Floyds initially used the borrowed funds to extend credit to Monthly Payment Plan (MPP), an affiliated company in Chapel Hill, North Carolina, that was in the business of financing annual insurance premiums for consumers.

“Loan Program investors were falsely led to believe that FIA was earning sufficient profits from which to pay the promised rate of return and fund redemptions of principal upon demand.

“In truth, by 2012, FIA had borrowed more than $20 million from investors and did not have the means to service the debt through any legitimate business source. In order to forestall bankruptcy, the Floyds operated the Loan Program as a Ponzi scheme in which principal and profits were paid to existing investors with funds raised from more recent investors. Investors were never advised of this fact. Instead, the Floyds willfully concealed FIA’s insolvency while continuing to accept additional investments. In May 2020, FIA filed for Chapter 11 bankruptcy protection. At the conclusion of that proceeding, it is anticipated that assets will be available for distribution to the victims of the Floyds’ scheme.”