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Ponzi scheme price: $60M stolen from 50; guilty man faces up to 20 years

POSTED: March 23, 2009 11:27 p.m.
SARA GUEVARA /The Times

Wendell Spell, left, walks out of the U.S. Courthouse in Gainesville with his attorney Paul Cognac on Monday afternoon after entering a guilty plea to one count of wire fraud. Assistant U.S. Attorney Russell Phillips said Spell defrauded at least 50 investors of more than $60 million.

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The staggering scope of the largest fraud case in Hall County history was revealed in federal court Monday, where Wendell Ray Spell admitted to defrauding at least 50 people of more than $60 million in a Ponzi scheme.

Spell, 50, of Clermont faces up to 20 years in prison when he is sentenced by U.S. District Court Judge William C. O’Kelly. A sentencing date has not been scheduled.

Spell was released on a $25,000 unsecured bond after pleading guilty to one count of wire fraud in U.S. Magistrate Judge Susan Cole’s court in Gainesville.

As he left the federal courthouse, Spell gave a brief comment to a reporter.

"I fully cooperated with the authorities, and I take full responsibility for my actions," Spell said. "I would like to apologize to my investors and their families and pray for their forgiveness some day."

Earlier, before granting bond, Cole asked Spell whether he had a passport.

"No, your honor," Spell responded.

The judge agreed to a request from Spell’s lawyer to seal from public view the address where Spell will be living.

"There are some issues in regards to my client’s safety," attorney Paul Cognac told Cole. "There have been threats upon his life."

Cognac said some of Spell’s victims took out life insurance policies on him and someone broke into a home where Spell was staying.

The judge told Spell that while out on bond, his travel would be restricted and he would need permission from court officials before traveling. He also was ordered to have no contact with his victims.

Outside court, Assistant U.S. Attorney Russell Phillips said the government did not oppose bond in the case because prosecutors "didn’t think it was necessary."

According to a criminal information filed Monday, Spell convinced investors to give him money to buy heavy equipment through his Aviation Boulevard business North Georgia Equipment Sales with the promise that he would sell the equipment to third parties "at a substantial profit."

Spell promised some investors he would split the profits with them "50/50," and promised others he would pay them annual interest of 36 percent.

Despite being given more than $60 million from more than 50 investors in Gainesville and elsewhere, Spell "led the investors to believe that he had used their money to purchase specific pieces of construction equipment, which he knew he had not purchased," according to the charge.

Spell made up bogus bills of sale and other counterfeit documents to make it appear he had purchased the equipment and "used a substantial portion of the fraud proceeds to pay phantom profits to investors, to pay his own personal expenses, and to purchase a variety of real and personal property for himself and his family members," according to the information.

Phillips said outside court he could not say how many states Spell’s fraud encompassed, but acknowledged it spread beyond Georgia.

In his guilty plea, Spell specifically admitted to receiving a wire transfer for $200,000 in September with intent to defraud an account holder in Talladega, Ala. The transfer was deposited in the Hometown Community Bank in Braselton in the name of Spell’s investment company, Cornerstone International Investments LLC.

The government filed forfeiture claims on 10 pieces of heavy equipment owned by Spell.

At least 20 people living in Gainesville have either filed suit against Spell or told authorities they were victims.

Three local attorneys representing the 18 people who have filed suit against Spell did not immediately return phone messages seeking comment Monday.

Spell’s Ponzi scheme collapsed in mid-October, when investors who began to question him about payouts went to his business to find it closed down. His whereabouts remained largely unknown until he was arrested on a bad check warrant in February.

Spell was not officially charged with the fraud until Monday. Officials with the FBI and the U.S. Attorney’s office have been investigating the case for five months.



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