The final tally of who lost money in the biggest Ponzi scheme in Hall County history will never be known, but a list filed this month in U.S. District Court sheds more light than before on the losses incurred by Wendell Spell.
Seventy-four individuals and four companies applied for restitution totaling $17.8 million, according to court documents attached to a final order signed by Judge William C. O’Kelley.
Three people claim to have lost $1 million or more to Spell. Four people lost between $500,000 and $700,000 to Spell, and nine people lost between $300,000 and $450,000, according to the document.
Spell bilked investors by initially paying out big returns — some as high as 36 percent annually — for investments in what he purported to be the sale of heavy equipment through his companies, North Georgia Equipment Sales and Cornerstone International Investments.
The payments were what prosecutors called “phantom profits,” and as in all Ponzi schemes, Spell used the money brought in from new investors to pay other investors.
The scheme collapsed in October 2008, and Spell pleaded guilty to wire fraud in March 2009. In August 2009, O’Kelley sentenced Spell to 12 years in prison, exceeding recommended federal sentencing guidelines by about two years. There is no parole in the federal prison system.
Spell, 51, is currently serving his prison sentence at the Federal Correctional Institution in Jesup, a medium security prison 65 miles southwest of Savannah, according to the Federal Bureau of Prisons Web site.
Some question how much restitution Spell will ever be able to repay. Spell’s attorney, Paul Cognac, has said his client was “absolutely broke” at the time of his guilty plea.
“There’s no hidden money; there’s no Swiss bank account. It’s all gone,” Cognac said during the sentencing hearing.
Likewise, Assistant U.S. Attorney Russell Phillips said at sentencing, “there’s not a big pot of money the victims are going to be able to divvy up.”
The government seized 10 pieces of heavy equipment and a few thousand dollars in cash from Spell, but some of that equipment was later turned over to people who had a claim on it.
Efforts to reach Cognac for comment Thursday were unsuccessful.
Arturo Corso, a Gainesville attorney who practices in federal courts but has no involvement in Spell’s case, said he believes victims will probably see little of the money they claimed in restitution.
“I feel for them,” Corso said. “They’ll probably never see a fraction of that amount.”
Spell will likely be required to work and make restitution payments as a condition of his supervised release, but that won’t add up to $17 million, Corso said.
The only real chance the victims could see much in the way of restitution is if Spell, who will be 62 when he is released from prison, either somehow launches a successful business, wins a lottery or comes into a big inheritance, Corso said.
Making a claim for restitution, Corso said, lets victims put a hold on the money in such an event, however unlikely.
“It’s like the sword of Damocles that is held over you, that says if you ever come into any money, you’re going to have to pay us.”