Transcripts For CNBC The Profit 20151114

Crooks are also the best salespeople. Narrator albany, new york. Realestate Investment Company rivertown Financial Claims to be dedicated to rescuing desperate homeowners from foreclosure. But in 2008, one of the companys employees, tony urbinas, senses something is wrong. Over and over again, homeowners who have enlisted rivertowns help receive notices that their homes are on the cusp of being taken away yet again. Urbinas digs through rivertowns paperwork to find out why and sees one suspicious transaction after another. There was just too much. Too much information that i was gathering that was not registering as being proper. Narrator he uncovers falsified loan applications and title transfers not filed with the county. When he confronts the Company Owner, Geoffrey Goldman, about his concerns, he gets no response at least not right away. A couple of days later, his phone rings. They had called me on a Conference Call to fire me, and they all started laughing at me. And that that really bothered me. So i said, well, laugh when the attorney generals are knocking on your door. Narrator when the Attorney Generals Office investigates, they find a company in shambles, a family split apart, and dozens of homeowners facing possible eviction from their homes. When katey white begins working at rivertown financial as a paralegal in 2005, the fledgling enterprise consists of only Company Owner Geoff Goldman, his younger brother, jonathan, and attorney Kevin Wheatley. Though modest in size, white says the company is brazen in its ambition. And no ones brassier than its owner, Geoff Goldman. He was very outspoken about his confidence nobody could ever touch him, nobody was better than him, and he was going to rule the realestate world. Narrator tony urbinas begins working for rivertown financial in 2006. He was a heck of a salesperson. You could see that. There was a belief system in what he was promoting, and he was promoting his product. Narrator his product is an innovation he creates for distressed homeowners called the leaseback program. He hypes it to urbinas as the ultimate winwin realestate innovation a way to turn a profit while helping homeowners facing foreclosure save their homes. Their premise was, are you in foreclosure . We can help you out. Or, are you having a tough time . We can help you out everything that has to do with, we can help you out. In theory, [chuckles] rivertown would basically rent out the home to the homeowner. They would purchase the home from the homeowner, and the homeowner would pay a certain amount of money monthly, as you were renting a property, and rivertown would maintain the home and pay taxes, any outstanding liens on the home, and then, eventually, once the homeowner got their financials together, they would purchase the home back from rivertown. Narrator the homeowner agrees to pay more to repurchase the home than what rivertown pays them, but in theory, everyone walks away happy. The homeowners stay in their homes, and rivertown turns a profit on the resales, plus on the rent they collect in the interim. I felt comfortable by telling people that, you know, you can do this. You may pay more, but this is all working towards your future good. And people understood that, and they were willing to do it. In my estimation and how i felt, its like, okay, the house is mine. Theyre just going to help me out for a year, and everything will be back to normal. Narrator june and Donald Buckland have lived in their twostory home in yonkers, new york, since 1988. Theyve raised a son there and paid their mortgage faithfully for more than 15 years. But in 2005, a car accident suddenly leaves both of them unable to work. I had gotten all the ribs just about all my ribs on my right side were broken. So i was out of work for a pretty long time. My husband also became disabled, and we decided that we were gonna try to refinance to sort of help us out. Narrator rivertown financial offers hope. Geoff goldman and attorney Kevin Wheatley meet with the bucklands and explain the leaseback program. We told them all our problems, you know, and they were very sympathetic, and they were ready and willing to work with us. Narrator unfortunately for the bucklands and nearly 50 other homeowners signing up for the leaseback program, rivertown isnt working with them theyre working them over. Rivertown promises that the equity still remaining from the sale will be kept in trust and applied to the down payment when the client repurchases their home, but that doesnt happen. Geoffrey would purchase the home from them, he would pay off any debts most of them had, and then he would take the remainder of the equity in the home and pocket the money for himself. Narrator the bucklands supposedly have 148,000 of equity waiting in trust from their sale. Theyll never see it again. And thats not the only matter of trust that goldman will betray. When american greed returns. The married goldman falls under the influence of an attractive new hire, and the company descends into chaos. She wanted control of the company. She wanted control of the company. She wanted it to her company. When you do business everywhere, the challenges of keeping everyone working together can quickly become the only thing you think about. Thats where at t can help. At t has the tools and the network you need, to make working as one easier than ever. Virtually anywhere. Leaving you free to focus on what matters most. No tellin how much im gellin. You gellin . You gellin . Im like magellan, im so gellin. Quit yellin were gellin. Riigghhttt. Dr. Scholls massaging gel insoles are so soft they make any shoe feel outrageously comfortable. Are you gellin . Dr. Scholls. Yeah. Thats the one right . We forgot dave thank you. So, can the test drive be over now . Maybe head back to the dealership . Its practically yours, but we still need your signature. The sign then drive event. Zero due at signing, zero down, zero deposit, and zero first months payment on a new tiguan and other select volkswagen models. Narrator in albany, new york, realestate investor Geoffrey Goldman claims he can be a savior for homeowners facing foreclosure. His company, rivertown financial, enlists dozens of homeowners into their leaseback program. But nothing is as it seems. It was done very unprofessionally. In the very beginning, the salespeople would meet. They would sit down and have a very professional meeting. Towards the end, it got to be geoffrey just saying, basically, give me your money. Narrator rivertown financial tells clients that the equity from their home will be held in trust for them, but its actually just being funneled into their own bank account. Reporter robert gavin covers rivertown financial for the times uniin albany. Thats stealing. Really, when it comes down to it, thats what youre doing. Youre stealing money. Narrator its not just Geoff Goldman. His brother, jonathan, and staff attorney Kevin Wheatley conspire against their clients, as well, and reap the benefits. They started gambling a lot, going away on expensive vacations. They were purchasing porsches, bmws. They were out partying all times of the evening, and theyd come in, and you could that theyd [chuckles] been out partying for quite some time. There was money that went for, like, wine lockers. There was money that went on a cruise. I think there was a trip to antigua. This is where the money from destitute people this is what it paid for. Narrator audrey and James Williams move into their fivebedroom home in mount vernon, new york, in 2002. They have a 223,000 mortgage that they pay regularly, but in 2007, they fall on hard times. I was getting a little bit sick, and i didnt know why, so i was missing time from work. And the doctors couldnt find why, you know, i was sick. Narrator doctors come to discover williams has ovarian cancer. It means chemotherapy five times a week, and audrey cant continue working. Its a strain on their budget, but they want to keep the house that theyve invested so much in and that promises to secure their future, as well. We bought our house for 230,000. In 2007, the house was estimated between 400,000 to 600,000, and we thought we were sitting on a gold mine. No way were going to let this house go. This was ours our retirement fund. So we decided that we needed to lower the mortgage. So, in the process of looking and making phone calls, these people turned up. Narrator these people are none other than rivertown financial. The williams arent interested in the leaseback program, just a simple refinance, and rivertown says they can help. When it comes time to make the deal, Geoff Goldman makes a personal appearance. When they walked in, and i remember looking at him, he had jeans, and a pink shirt, and he had these nice italian loafers on, and i thought to myself, oh, my god. Bloodshot, red eyes. Yep. And james says, this doesnt feel right. Narrator despite misgivings about goldman, the deal is too good to pass up. It was just strictly refinancing, and we would go from a 2,100 per month mortgage, including our insurance and taxes, to a 1,500 per month mortgage, including insurance and taxes. That was the understanding of it. Narrator but at the closing, goldman doesnt bring refinancipaperwork. He brings salpaperwork. Its something a lawyer would notice immediately, but goldman convinces the williams they dont need a lawyer. They were so smooth. This is a simple transaction. You dont need a lawyer, because a lawyers gonna cost you all this money. And we knew better. But it was like looking a gift horse in the mouth, you know . It was so good. Narrator the williams leave the closing thinking they have refinanced for 270,000, when in reality, theyve just sold their home. Rivertown then uses the home to take out a 367,000 mortgage. The extra 100,000 from the purchase . The williams dont see a dime. To make matters worse, thanks to their executives extravagant spending, rivertown financial isnt making all their mortgage payments, and loans are going into default. It got to the point where they were calling, people whose homes were sold to rivertown, calling, im getting notices my mortgage is not getting paid. Im getting notices my taxes arent getting paid. Its in our agreement you were going to pay these. And im going to lose my home now for good. Narrator the companys Office Dynamics are in upheaval, as well, with the introduction of a new employee, 24yearold jessica peryea. She was hired as a marketing person. However, gradually, her role changed completely, and she kind of ended up more as, i guess you would say, an assistant to geoffrey, into a role where they became very close and started dating. Narrator according to white and tony urbinas, the affair between peryea and the married Geoff Goldman is no secret around the office. They were, you know, Peanut Butter and jelly they were always together. He was buying her expensive things, taking her out, wining and dining her, and it was very, very evident. Narrator inside the office, however, peryeas arrival drives a wedge in the relationships of the goldman brothers and attorney Kevin Wheatley. Jessica kind of broke up the boys club. Her opinion counted more at this point that jonathans opinion or kevins opinion. Narrator it leaves white and urbinas with the sense that the company is coming undone at the seams. Geoffreys younger brother, jonathan, quits abruptly, and on top of that, the leaseback program is falling apart. White and urbinas begin putting their Heads Together to get to the bottom of it. We just knew something was not going on right. We could tell. Theres a lot of money coming in on a monthly basis from all the different clients. And it wasnt going towards the intended purpose. It was going into gambling and partying instead. Narrator but the partys about to end. When american greed returns. White and urbinas bring the Attorney Generals Office to rivertowns door for a 5. 7 million fraud. But in court, its a sibling rivalry that takes center stage. It was exactly like watching a child the way he talked about his brother. I mean, this is like something out of the brady bunch, not something you expect to see in out of the brady bunch, not something you expect to see in Albany County court. This holiday season, gi see you brought a friend . I wanna see, i wanna see. Longing. Serendipity. What are the. Chances. And good tidings to all. Hang onto your antlers. Its the event you dont want to miss. Its the season of audi sales event. Get up to a 2,500 bonus for highly qualified lessees on select audi models. Is that coffee . Yea, its nespresso. I want in. Youre ready. Get ready to experience a cup above. Is that coffee . Nespresso. What else . Narrator in albany, new york, tony urbinas and katey white are doing some amateur sleuthing into their employer, rivertown financial, and they dont like what they see. Doing some math, tens of thousands of dollars coming in on a monthly basis for all those properties, and the monies were not going towards paying the mortgages, paying the insurances, paying the taxes on each and every one of those properties. It was just going into a big kitty. Narrator neither of them knows the exact mechanics of the fraud, but in 2008, they take it upon themselves to reveal the inner workings of the company. When you start adding the blatant spending of money on highend toys, on trips, on lavish parties, i was not liking things at that point. Narrator urbinas confronts goldman about his concerns, but gets no response other than that Conference Call from goldman and wheatley telling him hes fired. Hours later, urbinas contacts the new york Attorney Generals Office and blows the whistle on a possible fraud at rivertown financial. So, it was very easy for me, and i dont know if it was for you, as well . No, i didnt have to think twice. It was definitely what i thought was the right decision. It was the right decision. It was. Narrator once the attorney general starts its investigation, Geoff Goldman can apparently see the writing on the wall. By the end of 2008, with dozens of clients depending on rivertown to save their homes, and rivertowns Bank Accounts drained by their lavish spending, goldman shuts the company down. Since enrolling in rivertowns leaseback program in 2006, June Buckland has endured heartbreaking traumas again and again. In 2007, her 99yearold motherinlaw is living with her and her husband when he dies suddenly of a heart attack. So, that left my motherinlaw and myself. And i was working two fulltime jobs. So, i had a 9 00to5 00 job and a 5 30to2 30 sometimes 3 00 job. Narrator during this turbulent time, buckland injures herself at her night job at a local casino and can no longer work there. She collects workmans compensation, but has trouble making ends meet. Then in 2012, buckland comes facetoface with rivertowns final crippling injustice. There was a notice on the door saying that the property is now owned by fannie mae and im to contact them. Narrator rivertown still owes 390,000 on the mortgage they took out when buying bucklands house. Even though buckland had been paying rent faithfully to rivertown for years, with rivertown gone, shes left with no real recourse. Actually, it was stuck right in here. There was a notice on the door saying that i have to evacuate the house in a matter of days. Narrator on january 17, 2013, fannie mae takes ownership of the house she spent nearly three decades making into a home. Yeah, lots of memories. A lot of memories, yeah. We have been through quite a bit in that house. Yeah. Narrator audrey and James Williams know how she feels. Fannie mae also owns the loan that rivertown took out on their home. But the williams protest that the loan was obtained fraudulently. Fannie mae lawyer says, we dont care. We dont want to hear about it. You want to stay in your house, you want your house, you will give us over 500,000. Narrator fannie mae declined to comment to american greed. But the circumstances pile tremendous stress on williams, who continues to get chemotherapy treatments five times a week for her ovarian cancer. Then just after christmas 2013, the williams get their eviction notice. Thwas my home. Its not my home anymore. They took it from me. Narrator james and Audrey Williams return to their old home for the first time a month after their eviction. This was my porch that we used to sit. We had our furniture out here and watched the world go by. I painted this whole house myself. All of this, i did of my own with my own hands. [ sighs ] the end result is where we are now. Im at my moms house. And its not a good look. In the springtime, ill come get my plants. Yeah. I have to wait until the springtime. Cant do nothing now. No, its too cold. Its been one nightmare after nightmare after nightmare. And were still going through nightmares. I didnt know it was gonna be so hard coming here. [ chuckles ] its all gone. They just take your life. Narrator more than 50 rivertown clients and lenders are affected by rivertowns fraud that cost at least 5. 7 million. Geoffrey goldman pleads guilty to grand larceny and scheming to defraud. On december 5, 2011, he stands before an Albany County judge for sentencing. I dont know that ive ever seen a guilty plea and sentence quite like Geoffrey Goldman. He actually said the words, im a good person, and while i have committed crimes, im not a criminal. And by the way, my brother, whos cooperated in this, everyone thinks hes the good guy and im the bad guy, but thats not really like that. And then on top of all that, he said, what i take issue with in this case are the exaggerated claims of fraud perpetuated against the homeowners. Most of the allegations are blatantly false. Thats not something you hear at a criminal sentencing. You plead guilty. Narrator his brazen attempt to justify himself does not impress the judge. Goldman receives 4 to 12 years in prison. His coconspirators also get time, including his brother, jonathan 16 months to 4 years for scheming to defraud. Kevin wheatley to 10 years for grand larceny and scheming to defraud. And jessica peryea one to three years for grand larceny. The four are ordered to pay a total of almost 5. 7 million in restitution. But with all their money squandered on their lifestyles, itll be a long road to pay it all back. We get a check every month between 3. 00andchange to 7. 00andchange. We had a huge one in september. That was the 67 . [ laughing ] 67 it was. Oh, nice. County of albany. 7. 20. It is the amount of this check written out to june and Donald Buckland. I dont know, james. What can i say to you . I dont know. One day at a time. Just one day at a time. One day at a time. I know you dont want to hear that sometimes, but. Me, look at me. What . One day at a time. Yeah. [ chuckling ] one day at a time. [ laughs ] okay. All right. Narrator up next. A nashville Financial Advisor wants his companys name in lights and doesnt care who gets slammed to pay for it. I had found out later that they worked on disabled children. Its kind of like, how could children. Its kind of like, how could you do this to someone . Directv is so advanced that you could put tvs anywhere without looking at cable wires and boxes in every room. How are they always one step ahead of us . Well, because their technology is far superior. Or because they have someone on the inside. Is that right, gil . Sir, i would never. Hes with them hes wearing a wire. Take off his shirt take off his shirt oh ah alright, im putting you in charge of the holiday party. vo get rid of cable and upgrade to directv. Call 1800directv. I can offer you no interest sittifor 24 months. Oday thanks to the tools and help at experian. Com, i know i have an 812 fico score, so i definitely qualify. So what else can you give me . Same day delivery. The ottoman . Thank you. Fico scores are used in 90 of credit decisions. So get your credit swagger on. Go to experian. Com, become a member of experian credit tracker, and take charge of your score. Or building the best houses in town. Or becoming the next highlyunlikely dotcom superstar. And us, well be right there with you, helping with the questions you need answered to get your brand new business started. Were legalzoom and weve already partnered with over a million new Business Owners to do just that. Check us out today to see how you can become one of them. Legalzoom. Legal help is here. No tellin how much im gellin. You gellin . You gellin . Im like magellan, im so gellin. Quit yellin were gellin. Riigghhttt. Dr. Scholls massaging gel insoles are so soft they make any shoe feel outrageously comfortable. Are you gellin . Dr. Scholls. Were the open water paddlers. The best part about kayaking together are times like this. Heres to friends who reac for better. Fewer carbs, fewer calories, superior taste. Michelob ultra. The superior light beer narrator in the summer of 2010, ladonna elkins is working in her home office when she gets a call from a friend. He says one of elkins clients, Aaron Vallett, is in the news. According to federal officials, vallett spent some of his. While we were chatting on the phone, because we always catch up, i literally was googling everything while we were on the phone together, and i was floored. Narrator elkins company does recordkeeping for a. D. Vallett company, a financialadvisory firm in nashville, which has just been slapped with a civil complaint from the securities and Exchange Commission for allegedly running a 5. 5 million fraud. Honestly, my immediate thought was, oh, my god. That is why he called me to transfer the money. Narrator just months earlier, vallett had elkins transfer nearly 900,000 out of clients 401 k plans and into his brokerage account. And now she fears she may have unwittingly allowed vallett to steal investors retirement savings. I really did kind of think twice, but at the same time, im like, well, this is aaron. Hes the president of the company. I dont want to lose my job. But hindsight, if i knew what was going on, i wouldve lost my job that day. [ midtempo jazz plays] clients pick us because thy know when they come to seek Financial Advice or portfolio management, we are going to put into action all of the products, all of the processes, all the services that we feel are necessary to accomplish the very specific objectives of the client. Narrator the star of this promotional video is nashville native Aaron Vallett, who is just 28 years old when he opens a. D. Vallett company in 2006. And his sights are set on becoming a major player in the financialplanning world. Weslee washington meets vallett through mutual friends a few years before vallett starts the company. Even then, however, washington says valletts drive to succeed is obvious. He would work and call me early in the morning. Hed call me late in the evening. He was pretty much working. Narrator the two quickly become friends, and around 2007, vallett suggests that washington transfer his entire investment portfolio over to his management. And i was fully on board with all that cause, again, he had done well by me, as far as being trustworthy, and everything i knew about him seemed on the upandup. We are gonna find out whats important to our clients, and we are gonna be able to advise, consult, and help place those services and products to our clients, whatever they may be. Narrator by 2008, vallett has dozens of clients Like Washington taking fees for managing and offering advice on 401 k s, i. R. A. S, and generalinvestment portfolios. But thats not enough for the selfpromoting entrepreneur trying to burst onto the scene. He opens up his own Investment Fund called the Collateral Fund. The threemonth secured shortterm note would return five percent. If you were willing to go to up to a year, it would return six percent. Narrator Shawn Murnahan and Graham Loomis are attorneys with the securities and Exchange Commission in atlanta. They say the returns vallett promises are high, but not outrageous. What concerns them is the guarantee. Well, anytime someone tells you that your money is fully guaranteed and safe and youre gonna get returns that are better than the market, thats a warning. Its very rare that you get good returns and safety in the same investment. Narrator over the next year and a half, vallett opens two more funds and charms clients into investing 5. 5 million into the three funds combined, but practically none of it goes where he promises. Mr. Vallett used his family members, friends that he had known for sometimes long periods of time, and convinced them that he could invest their money and provide them with a very substantial return, and that didnt happen. He didnt invest that money. He used it for his own personal gain. Narrator when american greed returns. A charity that runs a camp for Sick Children is a perfect opportunity for the insatiable mr. Vallett. Was this the first time that vallett operated on the wrong side of the law . Find out at americangreed. Cnbc. Com. Feeling greedy . Want more than your share of behindthescenes dirt . Follow us at americangreedtv on twitter. Follow us at americangreedtv on twitter. Well be right back. Ok, weheres dad. Mom. The twins. Aunt alice. You didnt tell me aunt alice was coming. Of course. Dont forget grandpa. Can the test drive be over now . Maybe just head back to the dealership . Dont you want to meet my family . Yep, totally. Its practically yours, but we still need your signature. The sign then drive event. Zero due at signing, zero down, zero deposit, and zero first months payment on a new jetta and other select volkswagen models. At ally bank no branches equals great rates. Its a fact. Kind of like ordering wine equals pretending to know wine. Pinot noir, which means peanut of the night. Theres a network that never stops improving. Thats grown faster than any other, covering nearly every american. And these geese. But its not who you think. Its tmobile. Our new extended range lte signal. Reaches twice as far. And is four times better in buildings. Think you know our lte coverage . Think again. See for yourself at tmobile. Com coverage. And sleep deprived. Bring us those who want to feel well rested. Aleve pm. The only one to combine a sleep aid. Plus the 12 hour pain relieving strength of aleve. Be a morning person again with aleve pm. Narrator in music city usa, nashville, tennessee, Financial Advisor Aaron Vallett is putting on the performance of his life. A. D. Vallett Company Everything financial. He saw building this brand, a. D. Vallett brand, to be a big brand. He saw himself being the next edward jones. We provide everything financial. We want to be a onestopshop, fullservice financialservices company. Narrator a. D. Vallett company handles companies payrolls, manages their 401 k s, and oversees individuals investment portfolios. But to be a household name, he needs to raise his profile. In 2009, he pays 320,000 to become known as the exclusive Investment Advisor of the local nhl team, the nashville predators, and he has bigger goals in mind. He told me he had first right of refusal to name the whole center. If he wanted it, it could be the a. D. Vallett center when that contract came up. And thats what his plan was. Narrator of course, hes building his brand on the backs of his investors. None of the money was invested as he represented. The money went to run his business and to otherwise engage in a very lavish lifestyle. And we saw transfers out to his country club. We saw a check written to buy a motorcycle. He went and bought a very big house on franklin road, which is a really wellestablished neighborhood. Narrator he buys the house for 750,000 and then gets a 1. 4 million loan to renovate it. He was doing well, and all indications that, as far as what i understood, it was all aboveboard. Narrator its far from aboveboard. But up until late 2009, vallett has only been stealing money from investors in his Collateral Funds. His advisory clients, people with i. R. A. S, 401 k s, and investment portfolios people like weslee washington have been spared. But that changes for washington in 2009, when he has some extra money to work with. I sold a house in nashville, and i had a lot of equity in that house. I had 100,00 equity in that house. And so i had that cash to invest. Narrator as a commissionbased job recruiter and a brandnew father, washington emphasizes to vallett that he needs a secure and accessible investment. I had to keep this cash liquid. I had to keep it safe. I couldnt put it in anything risky. I might need it. I mean, i might need all of it. Narrator a young father himself, vallett says he understands washingtons situation and comes back with a plan. And this plan had eight steps, and the first step was to put this cash to work. Narrator vallett recommends putting the 100,000 in the safety of his Collateral Fund. It seems to be exactly what washington is looking for. I remember a statement specifically from him when he said, this will be protected by the insurances that protect me, and that was good enough for me. I didnt have a reason not to trust him, so that was where it went. Narrator but thats not where the money stays. It was pretty clear from the bank records. You could see money coming in by wire transfer, and then the next day or that day, the same money would go back out, or a smaller amount, but it would go right back out to the country club. Narrator but even all the money in the Collateral Fund cant cover how much vallett spends. Roger murtie is a retired army colonel. Jenna, what are we doing . Narrator in february 2008, he opens a charity 70 miles from nashville called the center for courageous kids, a camp for children with serious medical conditions. Here, we do chemotherapy, we do dialysis, we do infusion for hemophiliacs, insulin for diabetics whatever care theyre gonna need to get through the weekend or the week of summer camp, were able to provide. Narrator it not only gives these children an opportunity to play, but to see their conditions in whole new ways. Theyre with 125 other children with the same condition. They can see that there is life after every procedure in these illnesses. And its a wonderful place for friendships to be born. So, everybody here this weekend has a child with a cardiac issue either a heart transplant, pacemaker, recently replaced valves, whatever it might be. We know we cant cure what these children have or fix what they have. Our job is to give them the best week or weekend of their lives, and most of the time, we accomplish our mission. Narrator in the fall of 2008, murtie is looking for someone to manage a 401 k program for his employees and finds Aaron Vallett. He seemed like a very conscientious young man who had a successful Business Plan and a successful business, and we were looking forward to becoming part of it. Narrator just a few weeks after meeting him, 17 employees of courageous kids have their 401 k s under valletts management, including murtie and his wife. And the relationship goes both ways. Vallett seems genuinely interested in helping murties charity. He donated to us the use of his suite at the then sommet center, and on that particular night that he offered it to us, miley cyrus was going to give a concert, and we were able to use this as an auction item at a special event, and it raised over 6,000. So we were thrilled. Narrator he wouldnt be as thrilled if he knew what Aaron Vallett was doing behind the scenes. By the end of 2009, hes burned through most of the money from his Collateral Fund investors. Now hes set his sights on the 401 k clients. He reaches out to the company handling his recordkeeping with a request. December 2009, i had gotten a call from aaron, and he told me that one of the clients wants to transfer money out of their 401 k account into a brokerage or an outsideasset brokerage account, because im gonna be managing their money on the outside. Narrator elkins says its a common practice. The problem is, vallett is lying. The client knows nothing about the transfer. Vallett is simply taking the money from the 401 k to put into his own business account to spend as he pleases. About two weeks later, same thing you know, this person is wanting me to advise them on the assets outside of the plan. We need to go ahead and have that money transferred to the a. D. Vallett financial group. Narrator he pulls the scam on 12 different investors for a total of almost 900,000, including transferring 59,000 out of roger murties 401 k without his permission. On client statements, the transfer is simply listed as an outside brokerage, but the balance of the 401 k itself doesnt appear depleted. Murtie confesses that he doesnt notice the change on his account, but one of valletts cliendoes and alerts the Tennessee Department of securities of a possible fraud at a. D. Vallett company. They were paying attention. It took one person with one call to start the ball rolling. Narrator when american greed returns. Law enforcement surrounds vallett from all sides, but he doesnt seem sorry just sorry for himself. Now, does he really believe that hes the victim . I mean, its money thats that hes the victim . I mean, its money thats gone. Was as long as the boat. For seven hours, we did battle. Until i said. You will not beat. Meeeeee greg. What should i do with your fish . Gary. Just put it in the cooler. If youre a fisherman, you tell tales. Its what you do. If you want to save fifteen percent or more on car insurance, you switch to geico. Its what you do. Put the fish in the cooler is that coffee . Yea, its nespresso. I want in. Youre ready. Get ready to experience a cup above. Is that coffee . Nespresso. What else . This holiday season, gewhats in the trunk . Nothing. Romance. 18 inch alloys. You remembered. Family fun. Everybody squeeze in. Dont block anyone. And nonstop action. Noooooooo its the event you dont want to miss. Its the season of audi sales event. Get up to a 2,500 bonus for highly qualified lessees on select audi models. Narrator by early 2010, Financial Advisor Aaron Vallett is reaching into his clients pockets to feed his companys image and his personal lifestyle. But according to john webb of the u. S. Attorneys office in nashville, he slipped his hand into one account too many. Someone expressed some concern and filed a complaint with the Tennessee Department of commerce and the division of securities. And when that happened, then the investigation started. Narrator the Tennessee Securities Division contacts finra, the financial industry regulatory authority, which starts to dig into valletts records. They quickly find that valletts Collateral Fund has no collateral. Without his clients money, hes worth practically nothing, because hes living off the clients and the money that they invest. Hes operating his business off of the clients and the money that they invest. He has very little money of his own. Narrator but his clients do have money, and vallett tries to pretend its his. Mr. Vallett attempted to use the income statements of two of his clients in order to head off the investigation. So, he gives them the fidelity statement, but cleverly, basically, just whited out the name of the investor and put his own name on the line, but yet he keeps the account balance the same so it makes it look like he has 5 million sitting in his account. So, it was a very easy step, a basic investigatory step. Finra called the Brokerage Firm and asked them to provide the original account statements for these. Lo and behold, when it comes to them, they see its the name of the client, not mr. Vallett. Narrator finra alerts the s. E. C. , which begins its own investigation. Its a very basic step. We get the bank records, because those dont lie. Thats where we saw the investor money was coming into the account and going out to pay his personal expenses. Narrator on june 2, 2010, the s. E. C. Files a civil complaint in federal court in nashville, and the judge issues a temporary restraining order against a. D. Vallett company. When ladonna elkins finds out, she immediately gets on the phone to warn valletts clients. My initial fear was that they could think i had something to do with this, but then, immediately, its like, i really dont care. Im calling them. They need to know this. Narrator one of the calls goes to roger murties c. F. O. , who discovers that vallett took 59,000 from murties 401 k account. Murtie calls vallett soon after to ask about the transfer. He suspects vallett will lie to him and gives him just enough rope to hang himself. He said, basically, im sorry. Thats an oversight on my part. I should have had you fill out forms for that. Let me send the forms to you. And you can sign them before the transfer took place, so predate these forms. Narrator asking murtie to predate the forms is an obvious attempt by vallett to cover his tracks, not to mention illegal. He even tries to sweeten the pot. He said, oh, by the way, would you like to borrow my suite . And you can auction it off again for a Justin Bieber concert. Well, i thought this was magnificent, but its a little late at this point. Narrator weslee washington had previously taken 15,000 out of his investment in the Collateral Fund, but after hearing about the complaint, he wants vallett to explain whats happened to the 85,000 he left in there. He said, all your moneys in there. Its frozen right now, but give me a month. Itll be taken care of, and youll get all your money back. Narrator washington was saving that money for his and his familys future and for the possibility of starting his own business. He wants to believe it when his friend tells him its not lost, but it gets harder with each passing day. I was holding out hope for that id get my money back and that the money was actually there. And then, of course, theres that just sinking feeling that, you know, youve been swindled. Narrator washington appears to grasp the situation much more firmly than vallett himself. I remember kind of the last time talking to him, and he was, you know, hurt. It was almost like he was hurt, like he was the victim. And i just remember thinking, man, quit trying to sell me on your innocence. Its time to, you know, just fess up. Narrator its a type of delusion that Shawn Murnahan sees personally. During a meeting at the courthouse, vallett hearkens back to his college days in colorado. He reveals, during the course of our conversation, that he had at one point been essentially a ski bum, and he made a comment that, you know, he guessed at this point he would have to go back to doing that. And it became clear to me that he didnt realize how serious it was. He didnt understand he was likely going to jail. Narrator more than likely. In february 2012, the u. S. Attorneys office files criminal charges against vallett, and weslee washington finally gets his wish to see him fess up. Vallett pleads guilty to 16 counts of mail fraud, wire fraud, and theft and is sentenced to 10 years in prison. Thanks to a federal law requiring 401 k plans to be backed by a fidelity bond, all of valletts 401 k clients are actually made whole. The 20 clients in valletts Investment Funds arent as lucky. I couldve taken that 100,000 and gone and bought a car. And to have it taken after i worked hard and saved and did everything that i thought you should do or a man should do, and it be gone like that, that was probably the most frustrating piece. Narrator after being burned by a man he considered a friend, washington now has trust issues. I mean, he was a buddy. He was, you know, a trusted advisor. It makes me think i do not need to do business [chuckling] with friends, really. I mean, it almost feels like itd be better to put it in a i mean, it almost feels like itd be better to put it in a coffee can in the backyard. Captions by vitac narrator in this episode of american greed. At age 54, realestate investor ed okun appears to be having a classic midlife crisis. Hes burning through cash and declaring his love at first sight for a woman half his age. And i cant believe she married me. Narrator but the money okun spends is not his. It belongs to people who just wanted to keep it safe. It never occurred to me that the money could be taken out of an escrow account. Narrator but ed okun, deeply in love, just cant stop. He bought three jets, a helicopter, a salon, luxury condos, luxury homes