When investigators from the FBI and the Securities and Exchange Commission begin showing up at the homes of Dominion Investment Group clients, it becomes clear that Daryl Bank is not the trustworthy adviser and radio host he presents himself to be. Bank, Roger Hudspeth and their associates have been skimming 20 percent to 70 percent off the top. At this point, there are hundreds of victims, who’ve lost around $25 million — much of it spent on Bank’s lavish lifestyle.
[00:00:02] Bob: This week on The Perfect Scam.
[00:00:04] Melissa O'Boyle: He immediately took anywhere from 20%, or sometimes as high as 70%, of the investor funds for himself to run his businesses, to pay his salespeople, and then also, to pay for the things that he wanted, you know, a $58,000 five-karat diamond ring for his wife, $25,000 dog, $300 shoehorn. I mean the things that they were buying were so frivolous, so materialistic.
[00:00:37] Bob: Welcome back to The Perfect Scam. I'm your host, Bob Sullivan. When we left Richard Fairchild and Charlotte Annas and Marcia Gray, their families' retirement savings had been thrown into limbo after they trusted a company named Dominion Investment Advisors, and trusted Daryl Bank and Roger Hudspeth. The three victims who all live not far from each other near Virginia Beach have all gotten calls from the FBI or the Securities & Exchange Commission or Virginia State Investigators telling them there's a problem at Dominion, a big problem. You can hear the whole backstory in part 1. If you haven't listened to that, you can go do that now. Today, we pick up the story with Marcia, a teacher who had been taking care of her mom for many years after her dad died. Mom called her home from school one day when the FBI showed up at the house to ask questions about her retirement account which was supposed to have about 1 million dollars in it. It takes Marcia 40 minutes to race home.
[00:01:41] Marcia Gray: Jennifer, the FBI agent was already there, and she'd already explained stuff to my mom and my mom looked shell-shocked. So when she started talking to me, I'm like, you’re kidding me. She asked if I'd heard of these different entities, and I said, "Yes." And she asked me if I knew about them, and I could recite some of the information that I'd heard about, and she said they're, you know, "We think they're fraudulent." And I went, "You mean she has no money?" She said, "Well, with the LLC, she probably doesn't have any money."
[00:02:08] Bob: She probably doesn't have any money? All her family's savings, decades of work just gone? It was hard to digest. And Richard and Charlotte have similar stories. Their money is seemingly gone too. But gone where? Right about now Assistant US Attorney Melissa O'Boyle joins in the Dominion investigation, and she slowly comes to understand why Marcia, Richard, and Charlotte's money has disappeared. Daryl Bank was spending much of it.
[00:02:39] Melissa O'Boyle: The way that he operated is that he, this money came into his accounts, and he immediately took anywhere from 20%, or sometimes as high as 70%, of the investor funds for himself to run his businesses, to pay his salespeople, and then also to, to pay for the things that he wanted, you know, a $58,000 five-karat diamond ring for his wife, a $25,000 dog, $300 shoehorn, I mean it, the, the, the things that they were buying um, were so frivolous and materialistic I just, I think he, he had the, he was capable of kind of differentiating between, he just thought it was his, he thought it was his money, and that's, that's the scary, that's the really scary part of it. One of the things that we, that we were able to trace were Mr. Bank used a lot of these investor funds to pay off his American Express account every month. And every month, and these, the, $100,000 Amex bill, or, you know, $111,000 Amex bill every single month. And so you could walk through it, and you can see what precisely was being paid for, and in, and one of things that we learned as we looked through his Amex bills was that he purchased a $25,000 dog.
[00:04:09] Bob: I, I don't even know what to say about that. Where do you get a $25,000, was it gold plated paws? I mean that's crazy. Wow.
[00:04:16] Melissa O'Boyle: He, he, I believe he testified at trial that it was a Belgian Malinois, like a protection dog.
[00:04:22] Bob: A $25,000 dog? Meanwhile, Charlotte's husband, Pat, is dealing with stage four cancer, and she can't access a penny of the $150,000 she'd given to Dominion. Even after she'd been interviewed for the investigation, Daryl and Roger, well they're still acting like everything is normal.
[00:04:44] Charlotte Annas: So I guess that summer, we had several in person and phone calls with Roger Hudspeth, and in fact, one of them was, was with Daryl Bank, and Pat just flat out told him, he said, "You know you're being investigated by the State of Virginia." And they claimed to have no knowledge of that.
[00:05:09] Bob: In fact, at various times they reassured Charlotte and Pat that everything was fine. Going well, in fact.
[00:05:16] Bob: What is it like to be on the phone with someone who has $150,000 of your money who you, you're pretty sure is in deep trouble and lying to you about it? What is that like?
[00:05:27] Charlotte Annas: Well, it was horrible. And not only that, we had invested more money into other things along the line. We put good money after bad. There were two other things. There were a total of 8 scams. We were caught in three of them. So all total we were into it at that point for $205,000 in three different, turned out to be, scams.
[00:06:01] Bob: And here he is on the phone saying, "Oh no, everything's fine. There's confusion here." I mean did you just want to leap through the phone and strangle the guy?
[00:06:09] Charlotte Annas: Oh, of course, and you know, and they keep saying, "We don't know anybody--, anything about anybody investigating us. We knew something was terribly wrong, but there wasn't anything we could do about it because if you've ever been a caregiver, that's all you can do is, you know, is try to get the person to and from their, their appointments, keep them as well as possible with all the poison that's going into their bodies to kill the cancer. I had my own health issues, so I was dealing with that as well. There were times that we both were getting IV infusions in the same week, and all we could do is just lay in bed and commiserate with each other.
[00:06:54] Bob: So Charlotte and Pat are lying in bed trying to help each other, while Daryl Bank is helping himself to their money. As federal prosecutor Melissa O'Boyle starts to peel back the layers of what's happening to the money, the depth of the crime starts to become clear. So does the relentlessness of Daryl Bank.
[00:07:16] Melissa O'Boyle: Usually a regulatory agency such as the Securities & Exchange Commission or, in our case, also the Virginia State Corporation Commission, that once they start investigating and looking at a particular target, you know, that usually is sufficient to shut it down, at least for a period of time. And that didn't happen here. You know, he got sued by the Securities & Exchange Commission in, in April of 2015 out in Arizona. He got, there was a motion for a temporary injunction to shut him down here in Virginia by our Virginia State Corporation Commission in June of 2015, and he shut down his companies here in Virginia, and but just moved the whole operation to Florida, and continued to operate. Nothing stopped Mr. Bank. When one investment failed, he would just tell folks, like well, that's, you know, just the way, you just, you invested in a risky investment and it failed, and he would create another one to take its place.
[00:08:19] Bob: Finally, after what seems like an eternity, the Feds start to close in on Dominion. At this point there are hundreds of victims who've lost around $25 dollars, much of it not invested, but instead, spent on a lavish lifestyle. The federal case is pretty straightforward. In part 1 of this story, we learned that Marcia's parents had followed Daryl from his original brand name brokerage to his new smaller investment firm. That wasn't entrepreneurship, it was evasion. Daryl had actually been barred from selling securities in 2009 by FINRA, the Financial Industry Regulatory Authority. It was illegal for him to sell any securities. He did it anyway. None of the victims knew. So in August of 2017, a grand jury hands down a multiple count indictment of Daryl Bank for wire fraud, mail fraud, and unlawful monetary transactions. Roger Hudspeth and others who worked at Dominion are indicted too. Meanwhile, Pat's health had severely declined, and he doesn't live to see justice done.
[00:09:31] Charlotte Annas: He never knew that they all were indicted, but about two weeks before he passed our financial advisor, our good financial advisor, brought us a document that had been submitted to the State Corporation Commission, and in it he, Roger kind of said he was guilty, but that he didn't know what he was doing was guilty, you know, it was kind of weird, but Pat was able to read that by himself. Uh, he still, you know, had enough mental faculties to, to read it and understand what he was reading. And we had a conversation and I said, I said, "Let me tell you one thing." I said, "I will follow this till the end, however long that is," and I said, "and if I ever get back a cent of money, I will do something fun with it," I said, "because this has caused us nothing but heartache." I said, "I may be going to Virginia Beach to get a hot dog, or if I get a lot of money back, I may be going on a world cruise. We'll just have to wait and see." And he said, "You do it, girl. You do it."
[00:10:48] Bob: Roger Hudspeth eventually pleads guilty to investment advisor fraud. Several other codefendants plead guilty for their role in the scam. But Daryl, Daryl decides he wants to go to trial. There are litigious delays and there are COVID delays, so the trial doesn't begin until 2021. And most of that time Daryl is out on bail still enjoying as much freedom as his victims.
[00:11:15] Bob: And so I was going to ask you if you were surprised as I am that this went to trial, that he didn't take some kind of a plea deal. The case seems so open and shut. He thought he was going to get away with it right to the end, maybe?
[00:11:28] Melissa O'Boyle: He did. I, I have no doubt that he did.
[00:11:32] Bob: In fact, and this is very rare in criminal cases, Daryl testifies in his own defense for several days. Here's a reenacted section of a court transcript as Daryl answers questions about Mildred Gray, Marcia's mother.
Court transcript excerpt:
[00:11:46] Melissa O'Boyle: And she lost almost three-quarters of a million dollars in connection with these private equity investments, isn't that right?
[00:11:53] Daryl Bank: Unfortunately, yes, ma'am.
[00:11:55] Melissa O'Boyle: Right. And I believe you told the jury that you were devastated?
[00:11:59] Daryl Bank: Absolutely.
[00:12:00] Melissa O'Boyle: You were devastated but you never told Mildred that you made hundreds of thousands of dollars on these transactions. Did you?
[00:12:07] Daryl Bank: Again, I disclosed whatever Mildred asked me, because she was as close as a grandmother. But did she probably know every single fee? No. Was it held back? No. It was not.
[00:12:18] Melissa O'Boyle: Okay, because Mildred didn't ask you how much money you were going to make on these transactions, do you think it's perfectly fine to take hundreds of thousands of dollars from her?
[00:12:29] Bob: Yes, Daryl says essentially. During his entire testimony, he shows no remorse.
[00:12:36] Melissa O’Boyle: He testified for over, I believe, 2½ days. I think what struck me, I think, the most was that there was just no, there just did not appear to be any remorse there, at all for what he had done. And he, you know, he testified, he rec--, he ultimately ended up admitting that quite a bit actually, that these were, that these were, and this is, might be a little bit more legal than you want to get, but he did admit to that ultimately that these were securities, that he was selling securities, and that they were unregistered securities, and that, and, and that he shouldn't, that he ultimately shouldn't have been selling them, and he was the one that created them. But he never, he admitted further that he didn't, even, even though he knew all that, he, he never told the victims that they had invested in, you know, illegal, unregistered securities that he had created. And, you know, he testified for a very long time, I believe and, and, and was going into the facts and details of, of the scheme, and, and attempting to justify it. I think he was trying to suggest to the jury that, I think trying to, you know in a way persuade the jury in the same way that they tried to persuade his victims to part with their money, that this was, that this was all perfectly well and fine, and, and you know, he didn't deny that, 'cause he couldn't, that when he got a hold of these victim funds, that he stole for himself anywhere between 20% to 70% just straight off the top for himself. He couldn't deny what he purchased. I mean he was almost proud that he had spent $25,000 on that dog, and, and you know, and $58,000 of investor funds on, on a 5-karat diamond ring for his wife. And, and you know, I think it was, it just, it takes a, a pretty extraordinary person to get up there and to, you know, try to justify the massive amount of financial devastation that, that you left behind without recognizing or accepting any level of responsibility or, or that you violated in the worst possible way, fiduciary obligations that you had to your 80-year-old client whose, you know, husband you've, there was one, Miss Gray, um, and her daughter testified at the trial, and Mr. Bank had been their financial advisor for years, even when he had held his securities license. And then after he lost his license, he basically took all their money, over a million dollars, and invested it in all of his private equities, and lost it all. And yet, sat there on that witness stand and did not express a single shred of remorse that he, he sold and lost, you know, over a million dollars from an 80-year-old woman um, who, as a result of this, was living, you know, living with her daughter, um, because he basically had stolen her entire, you know, her entire retirement.
[00:16:22] Bob: Remember that Richard Fairchild had found his way to Dominion through Daryl's Saturday morning radio show. Well, the show is presented as a star witness at the trial. Here's a revealing segment about the way Dominion makes money from clients through fees.
[00:16:39] Daryl: I'm a, I'm a transparent kind of guy. We, we get fees from different arrangements. If a client asks, I want to put everything on the table. But I will tell you, sometimes there may be things that maybe we get marketing allowances from otherwise. If a client doesn't ever ask, I, I don't think of that as an extra burden on them, but ask the question, and if you, the person that you're working with should be willing to be transparent. If not, hey look, they gotta get paid for what they're doing, right, Rob?
[00:17:05] Rob: That's right.
[00:17:05] Daryl: There's nothing wrong with that.
[00:17:06] Rob: And, and there isn't. I mean we're not in this for the suntan, right?
[00:17:10] Daryl: Right, right, but, uh, if you ask the question, because like I said, there could be other ways that revenue's coming in. There's nothing wrong with that, but it's not necessarily disclosable, or they're not necessarily required to disclose it. The big one that I can think of is, if there's a front-end load, that should be disclosed. Uh, if you're paying a hard fee, meaning you're paying a quarterly or annually fee, uh a hard fee, that should be disclosed. The other stuff you need to ask, uh because there's no requirement to disclose those things.
[00:17:39] Bob: During his testimony, Daryl gives the jury the same kind of sales job he gave to clients.
[00:17:46] Melissa O'Boyle: I think he, he's someone presents who himself as, that he's the smartest man in the room. And so I think he, I do believe, I mean I, I, I think he, he went to trial fully, I think he believed the jury would, you know, believe him.
[00:18:01] Bob: Finally, Daryl's testimony is over, and the jury leaves to deliberate. But while the courthouse awaits the jury's verdict, a curious thing happens outside the courtroom. An older woman who'd been at the trial every day approaches Marcia Gray who had testified during the trial.
[00:18:19] Marcia Gray: In the midst of COVID, she said, "Can I give you hug?' And uh, I believe it was a God thing. I'm a Christian, and I believe that God pushed me in... and it was one of the most genuine hugs I'd ever received. And um, then she steps back and says, "I'm Daryl's mother."
[00:18:35] Bob: It was Daryl's mother hugging one of his biggest victims. Daryl's mother saw through what her son had done and goes up to various victims at the courthouse and apologizes.
[00:18:46] Marcia Gray: She's very genuine, very kind. She was heartbroken. But she said she felt she needed to be responsible to hear what he had done. They lived in the same community on the same street. And Daryl quit talking to her because she started questioning him, "How are you spending so much money?" And she hadn't seen her grandkids in like four years, and they saw the grandkids every single day. So he turned away from his own parent. As a matter of fact, Daryl's mom told me afterwards, she said, "I listened to all of this, and I cried the whole time you were on the stand because your parents trusted my son. And your parents were one, like one of the longest ones that had invested with him, and from all that he had said. And I said, "He was just so believable. It's just unbel--," you know, and I fight being guilty about it. 'Cause, but I questioned, and he had an answer for everything.
[00:19:36] Bob: But Daryl doesn't have enough answers for the jury. After a quick deliberation, he's convicted on 27 counts of fraud. Prosecutor Melissa O'Boyle sums up the crime.
[00:19:51] Melissa O'Boyle: And so what, what the primary principal, Mr. Bank, did was after he was, after he lost his securities, his license to sell securities in 2010, he took it upon himself to create these so-called, you know, private equity investments which, you know were not, they were not private equity investments, they were just illegal, you know, fraudulent investments. He told lies to investors, and then had you know, primarily insurance salesmen all across the country who were working for him. They told lies to their investors, and, and their clients, and ultimately, once Daryl got a hold of the funds, he stole large portions of those for himself, um, used it to fund his criminal enterprise, used it to pay all of this conspirators, the salesmen and other principals, and then used it to fund his very lavish, extraordinary lavish lifestyle. And so the story is, is simple in that, you know, he told lies and stole money. The thing that was extraordinary about this case, I think, for our investigative partners and for us, was just, you know, just the level of destruction, um, and the sheer scope of it, um, was just, just devastating and heart wrenching to behold.
[00:21:24] Bob: In all, federal authorities managed to secure 11 convictions in the case.
[00:21:29] Bob: So an important part of this story is that it wasn't just one man's lies, it was a team of liars.
[00:21:34] Melissa O'Boyle: And that's why with this, with this particular case from our office's perspective, we wanted to hold as many of those individuals accountable as we possibly could. So we, we had your two separate indictments, two separate charging documents that charge 10 different people, and then also a criminal information that charged another salesman, and so all told, at the end of the day we just finished up our last trial um, involving these conspirators, and there have been 11 convictions in this case.
[00:22:06] Bob: One by one, as each convicted criminal comes up for sentencing, the victims of Dominion Investments get to have their say.
[00:22:15] Melissa O'Boyle: So, at our sentencing hearing, the victims have, in our system, in the, in the federal system, they have a right to write letters to the judge or to speak in open court at the sentencing. And so, in this instance we had a multitude of letters...
[00:22:35] Bob: And plenty of the victims come to the sentencing hearings to read these letters in open court.
[00:22:40] Charlotte Annas: I was there at the sentencing. I spoke at the sentencing. There were quite a few people there. He had, just him personally had 75 victims throughout Hampton Roads. And it was a small, a rather small courtroom but the courtroom was packed with victims. And there were probably about... 6 or 8 of us that got up and spoke. One of the people that spoke, her son had grown up with Roger and they had known him for 30 or 40 years. And he had scammed the parents.
[00:23:25] Bob: Charlotte follows through on her promise to Pat and sees all these cases through to their conclusion, writes a series of impact statements.
[00:23:34] Charlotte Annas: The first one it took me about five hours, and that was to Roger. And I put it off as long as I could. I wrote it, I cried through the whole thing while I was writing it. For Daryl, I sat down and a lot of it was still basically the same information that I had in the first one, but I sat down and wrote that thing and it was just all anger that came out in that one. I called him every name in the book. I called him scumbag, I called him slime, I called him, you know, I said, "You have no moral compass." And when I got into court that day and stood up, I tried to look at him four or five times in the eye, and he would never look at me. He never looked at anybody that day.
[00:24:27] Bob: When Richard Fairchild has his chance to speak, he doesn't hold back. He has a very specific request for the judge.
[00:24:35] Richard Fairchild: Finally, that Daryl Bank be handcuffed and leg shackled in front of his victims today so that we may get some real closure, because up to this point, Daryl Bank had been free. He, when he first got arrested, they did keep him in prison or in, in the local jail under the Bureau of Prisons, the federal uh for I think it was like six months, and then his father wound up providing the money for his, his bail. So pretty much, he was free up until 2021 at this point. So you figure that from 2013, 2104 when, when he got the money, 2016, 2017 when I discovered that I had lost all this money, my wife and I had lost all this money, he was free for five years while we suffered.
[00:25:29] Bob: Richard reads another statement when the Dominion office manager is sentenced. Here he is reading part of that statement for us.
[00:25:37] Richard Fairchild: I am a realistic and pragmatic man. I know that she will not see anywhere near the 60 years she rightly deserves, let alone the 240 she faced before taking this plea deal. But I said that to emphasize the damage vs. the penalty of one of her cohorts. At maximum sentence, her penalty is but two months per victim. Is this fair? Seven hundred years ago, the Italian poet Dante in "The Divine Comedy" recognized fraud as the worst of sins, the ultimate evil more than any other act contrary to God's greatest gift to mankind -- Love. In fact, he placed the perpetrators of fraud in the lowest depths of hell even below those who committed violent acts, and those who betrayed their benefactors were the worst of all. Your Honor, we the betrayed benefactors have already been to hell due to Raeann Gibson and her associates. Thus we desperately plea for justice today."
[00:26:41] Bob: The victims through all these sentencing hearings get to know each other a little bit.
[00:26:45] Charlotte Annas: At the end, the judge, he said restitution should be paid in full--, 100%, and he started going down the alphabet. No one's names were ever given. It was just by initials. And so every initial, I was, I'm trying to write feverishly down the list. And it was anywhere from $17,000 to $800,000 that people had lost. And I remember after court adjourned, we went back into the Justice Department's office meeting rooms, and um, one of the ladies asked, "When am I going to get my money back?" And the lawyer said, "Well, you know, there's a whole scenario that they have to go through." But as she put it after a few people left, she said, "You know, the people that were in it for 17--, $17,000, that's everything that they had to invest. "They’re just as, you know, they're just as broke or broker than the ones that had more money in it, because that was everything that they had." I met the gentleman that had lost the $800,000. He, he had lost his wife at some point because he, in my statement, I said I had lost my husband, you know, during all this. And he asked me when I lost my, my husband. And then somebody said, "I wonder who it was that lost the $800,000." And he kind of sheepishly held up his hand. He said, "That would be me."
[00:28:27] Bob: Finally, after the last victim impact statement is read, Daryl Bank is served justice.
[00:28:35] Melissa O'Boyle: Judge Raymond A. Jackson listened and he's always incredibly prepared. I know he reads every single letter and listened, you know, to every victim that got up to tell the court how this has impacted their lives, and the devastation that Mr. Bank caused. And I know, obvious--, and then the judge takes all that into account, and I think he certainly took um, what happened with the victims into account when he sentenced Mr. Bank to 35 years.
[00:29:06] Bob: Daryl Bank is 51 years old when sentenced. So he is not likely to see freedom again. So justice is served, but not completely.
[00:29:17] Melissa O'Boyle: The sad thing is, is that because of the way this scheme operated, and because we have so much loss, and so many victims, you know, even the item, you know, we, we, we tried to preserve as many assets as we possibly could, but there's no possible way that, that we would ever be able to make them whole, which, financially, which you know, we would, of course, love. I mean I would give anything to do. Um, but a lot of that money is just gone, it's just gone. Spent to run his, you know, spent on trips, spent to run his company, you know, spent as commissions to his salesforce, all that, you know, to keep the criminal enterprise running. Spent on lawyers to represent him and the various regulatory, various regulatory uh, cases that were against him. I hope that, that that, this sentencing gave them a sense of justice, and a sense of closure, um, at least in, in for that part of their lives, because you know, there's only, there's, I, we can't, we, we recognize fully that we can't make them whole financially, but we at least, you know, adept... we at least attempted to make sure that justice was served and that those that were engaged in this scheme were held accountable.
[00:30:43] Bob: The losses are truly incalculable in some ways.
[00:30:48] Marcia Gray: But I had to really work up a anger to read my impact statement because they said, "Marcia, this is your money. Your mom and dad saved this money to use for them, and then they wanted their children to have this money to be able to be in better straits than they were." And we're like Mom and Dad. We live frugally. Well I do. I taught school, and I don't really touch my investments, but the money that we got was nothing compared to what it would have been. I mean my mom would have had between 2½ and 3 million dollars probably by the time she died. And we didn't have that. So my parents were not able to leave the legacy behind that they wanted to leave.
[00:31:27] Bob: Richard feels the same way. It was about a lot more than money.
[00:31:32] Richard Fairchild: Yeah, I mean think about it is that number one, my father taught me to do right. All right, to play, to play by the rules. My, my spiritual beliefs say the same thing, you know. I trusted these people to with, with a major amount of our funds and they stole it from us. And at this point, understand that my, my marriage suffered a little bit. My wife didn't trust me anymore in, in anything, but then I also started looking at everybody with distrustful eyes, that a doctor said, well you, I need you to go to this doctor and he's, you know, you need to get these blood tests, you need to do that, and I didn't trust them, because it's like, oh no, you just want my money. See, everybody was out to get my money then. There was a certain amount of paranoia, there's no doubt about it. Maybe you know, it, it started off perhaps as caution, but it was amplified by this. And it might have been illogical, it was definitely emotional, but I did not trust anybody and that's when I, when I talk about it, those are the feelings that I went through.
[00:32:44] Bob: So speaking of that, what are the prospects for you getting any of your money back?
[00:32:48] Richard Fairchild: Oh, I'd say zero to none. Or is it zero to under, under... I don't know. I, from my, you know, they said that they have confiscated some things. They confiscated diamonds and jewelry and I don't know if they've confiscated other properties or things, but I, they haven't said anything at this point, and also too is if Daryl Bank decides to go and get another retrial or something like that, you know, that'll delay things. My personal opinion is if any money, if any money ever comes, uh, it'll be to my estate. I'll be long dead to be honest... if the money comes. I don't think it ever will. I think he buried most of it, and then everything else will be taken by the government.
[00:33:35] Bob: Charlotte has a long set of emotions to work through, including some anger at her neighbors. Remember how this all got started for her. A friend had invited her and her husband, Pat, to an investment dinner.
[00:33:50] Charlotte Annas: Two years later tells us, he says when things are starting to go south, he says, "I don't know about that boy." He said, "He didn't make any money for me while I had my money with him. I made more money on my, doing my own thing on the side, so I took my money away from him." Now if he would have told us that two years before we decided to put money with him, we probably would not have, or we would have looked deeper. So...
[00:34:28] Bob: Of course, yeah, yeah. But, but at this point, that he, he didn't stop you, so you decided to...
[00:34:34] Charlotte Annas: No. He just said, okay.
[00:34:37] Bob: Got it. Got it.
[00:34:38] Charlotte Annas: There was no real conversation. We ate dinner with this couple two to three times a week, so there were plenty of opportunities for him to talk to us. I mean it wasn’t like just somebody that we ran into every now and then. These were good friends that lived in the same neighborhood we did, and there were a group of friends, anywhere from 6 to 10 people, that had dinner several times a week together, or lunch, or both.
[00:35:09] Bob: Yeah.
[00:35:10] Charlotte Annas: So there were plenty of opportunities.
[00:35:13] Bob: Yeah, that's a, that's a real shame.
[00:35:15] Bob: As these sentencings wind down, Charlotte looks forward to putting all this behind her, for her sake and for her husband, Pat's sake.
[00:35:24] Charlotte Annas: And it's been a, a, this coming Sunday will be six years since, since I lost him ... but I have seen it through, and I, I will be there, there's like four more sentencings, with these final two being sentenced June the 23rd. So on the June the 23rd, I will be in court in Norfolk, Virginia, to give my last victim impact statement. It's about a 3½ hour drive from where I live, but I will be there, and I will come out and it will be done.
[00:36:02] Bob: Remember her husband Pat gave blood every 56 days for decades. Nearly 20 gallons through his life.
[00:36:11] Bob: All I keep thinking is that your husband was giving blood while Daryl was taking his blood.
[00:36:16] Charlotte Annas: Yes.
[00:36:17] Bob: You might remember that when Pat was close to death, he had instructed Charlotte to take any of the money she might get back from the case and have fun with it. Well, she hasn't gotten anything back, but she did have her moment of quiet celebration with Pat.
[00:36:35] Charlotte Annas: Still have not got one cent of money back, but the day that they called me and told me that Daryl had been found guilty of 27 charges, the next day I have moved, and I've moved into a much smaller community, they have a, a free hot dog day once a month from late spring through early fall. So we went to the free hot dog day. And I, and I held my hot dog, and I looked at the sky, and I said, "Pat, I've got my hot dog."
[00:37:17] Bob: That's a beautiful story. I'm sure he enjoyed it with you.
[00:37:21] Charlotte Annas: Yeah. But...
[00:37:24] Bob: I have a feeling you have a few more hot dogs left coming your way, too.
[00:37:28] Charlotte Annas: (laugh) I hope so.
[00:37:30] Bob: Listening to the story of Charlotte and Richard and Marcia, it's just so sad, but hopefully it sears some warning signs into your head and heart. For starters, just because someone invites you to a lunch or a dinner with a supposed expert, doesn't mean they think the person has good financial advice. My advice, just skip the free meal. Melissa has other advice.
[00:37:52] Melissa O'Boyle: I mean I still believe that people are basically honest. I think, I do. I think, I think the vast majority of people have integrity and are ethical and take their fiduciary responsibilities to, to their clients very seriously. But I think there are, there are people like Daryl Bank out there who, who, you know, I think think more of themselves and, and they, they can dress it up in a, in a, in a document and, and will take, you know, will, will feel very little accountability when something fails.
[00:38:41] Bob: Just like a free lunch doesn't equal good advice, well a radio show doesn't equal good advice either.
[00:38:49] Melissa O'Boyle: The radio shows are common. We've, we've had, there were several salesmen also, like you mentioned Roger, Mr. Hudspeth, Mr. A.G. Williams Smith who was one of the defendants out in California that just went to trial and was convicted on all counts in February, he also had a radio show. Um, and Mr. Bank, of course, had his radio show called Putting Your Financial House in Order, that's, that was the, that was the name of his show, um, which is extraordinary when you consider the fact that all the victims, you know, he basically devasted their financial houses, not put, you know, did not do anything to put them in order. That is, that is definitely a marketing mechanism that, you know, several of our conspirators used to get clients. That and there also, Mr. Bank, uh self-published a book where he wrote a chapter in two separate books and so that also, that, that also was something that he used, I think, to give himself moral legitimacy. We even had, we even had and, and the, the, the awful thing about it is that basically he was using victim funds, funds that he got from the, the investors to support all these enterprises. So the victim funds, you know, it just was a vicious cycle. They used the money to put on the radio show. They used the money to self-publish his book. Mr. Bank even bought this from this, from this particular media organization, a package that included giving him a fake, two fake awards where he traveled to New York, and almost like the Emmys, like his name was called, he went onstage, he got this award, and he took a, you know, they took a, they took a picture, and then he had, you know, an interview, a fake like red carpet interview with a model all dressed up. And, and it's, it's literally something that he paid for. And then he would put that award kind of on the conference table in his office as though he had just won some sort of legitimate writing award. And, and it was all smoke and mirrors, all of it. It was just all paid for by you know by, by investor funds.
[00:41:20] Bob: And one more specific piece of advice Melissa has, self-directed IRAs can be a good vehicle for some people, but handle them with care.
[00:41:31] Melissa O'Boyle: The other factor that I think was also present in this case that was used as a fraud, as a mechanism for fraud was the self-directed, individual retirement account where Mr. Hudspeth, the sales--, you know, the salesforce, including Mr. Bank, it directed folks to move retirement funds from 401k accounts with brokers to self-directed IRAs. I don't think that a lot of the victims understood precisely why they had to do that, or even that they were doing it. I don't think they completely under--, a lot of them did not understand that once the money's removed to that self-directed IRA, that, you know, that Mr. Bank was filling out the paperwork to direct the, the funds to himself, and that he was basically taking whatever he wanted to straight off the top once he received those funds. So that's another, I think another area of, of concern that actually the Securities & Exchange Commission has, has put out warnings about self-directed IRAs and their use in fraud schemes like this one.
[00:42:41] Bob: I'm really glad you said that. I hadn't considered that, but it makes sense, if, if someone urges you to put money in a self-directed IRA, they're taking some guardrails off, and you should proceed with great caution, right?
[00:42:51] Melissa O'Boyle: That is, you've hit the nail on the head. You've, you've hit the nail on the head. That the, and phrasing it as guardrails is exactly right. And most people don't understand that there are a lot of requirements that, that are in place on kind of the standard 401k, the companies that kind of manage those for, for retirees. But when you move those funds into a self-directed IRA, a lot of those guardrails are gone. And it, it does allow, it does give the, the client a lot of flexibility to do whatever they want with the money, but, but in this instance, you know, Mr., Mr. Bank would fill out the paperwork to have the money sent over, and then he would fill out the paperwork to have the monies transferred, you know, to himself. And no one was double-checking behind to, to see whether or not this was a, a proper or appropriate investment that was suitable for individuals.
[00:43:56] Bob: Richard has advice to offer anyone who'll listen, and it begins with listening, to the people closest to you.
[00:44:05] Richard Fairchild: I, I remember as clear as can be, my wife looking at me and saying, "I don't like him. I don't like this." And I'm like, nah, you know, it's just, he's under a lot of pressure, you know, he's trying to get things done for us, and I, I just made excuses. Uh, I got sucked in. And uh here, here's my first piece of advice, especially for men. Men, if you're sitting with your wife and she says something don't feel right, and you'll have to pardon that I'm going to say that in slang, pop smoke, and dust off. Get out of there. Beat feet, whatever it is, get out of there. Trust your wife's instinct, and it, it goes the other way around too. Really, if, if anybody, wife, husband, girlfriend, boyfriend, fiancé, they say something doesn't feel right, I, I don't trust him or whatever, get out.
[00:44:55] Bob: You're going to have to translate pop smoke and dust off for me.
[00:44:58] Richard Fairchild: (laugh) That's a military term, so obviously you can tell I've been contracting with the military for a long time. Popping smoke, if you look at some of the old, like Vietnam things where a helicopter will be coming in, and you see a different color of smoke, uh which means different things, whether they're under fire or whether there's wounded. So when you pop smoke, that means we need to be evacuated.
[00:45:21] Bob: Richard also has a really good piece of advice when it comes to dealing with aggressive salespeople to help you pop smoke and dust off. It's okay to tell a lie, a white lie to get out of an uncomfortable situation.
[00:45:35] Richard Fairchild: I know Mama said, never tell a lie, but they talk about white lies or whatever, but if you are not comfortable saying, no, here, you know, end of conversation no, then give an excuse. Give some baloney excuse you know, hey, I've got to check with my mom, I've got to check with my sister since she's also on that account. I don't have, you know, I have a sister but if, even if you don't have a sister, you know, I've got to talk to my mom, my dad, whoever. Come up with some excuse, it doesn't have to be true. You know, 'cause again, what's the worst, what is the worst thing when you say that lie? You still have your money.
[00:46:14] Bob: And Charlotte's advice: Be careful who you trust when asking around for advice on financial advice. Even your friends can steer you wrong.
[00:46:25] Bob: Yeah, and in this case, I mean your friends, who you saw frequently, did, didn't really tell you the whole story and I, I actually, I don't think that's that unusual. I think there's lots of situations in life like that which to me means you shouldn't necessarily even trust your friends to give you investment advice.
[00:46:41] Charlotte Annas: Right. Right. You have to do your own homework.
[00:46:48] Bob: You have to do your own homework.
[00:46:49] Charlotte Annas: And don't be afraid to ask questions, and don't be afraid to look up information.
[00:46:55] Bob: Yeah, you're not going to embarrass anyone, You're not, you're not going to hurt your friends' feelings if you end up saying no.
[00:47:03] Charlotte Annas: But...
[00:47:04] Bob: Is there, oh, I'm sorry, go ahead.
[00:47:06] Charlotte Annas: I'll never go to another investment thing in my life. And one of the things that I said in my last, it's, it's really made me jaded to give money to anything or anybody.
[00:47:22] Bob: Anyone looking to invest can get good information on how to do it safely at the SEC's website, investor.gov.
[00:47:31] Bob: If you have been targeted by a scam or fraud, you are not alone. Call the AARP Fraud Watch Network Helpline at 877-908-3360. Their trained fraud specialists can provide you with free support and guidance on what to do next. Thank you to our team of scambusters; Executive Producer, Julie Getz; Researcher, Haley Nelson; Associate Producer, Annalea Embree; and of course, our Audio Engineer, Julio Gonzalez. Be sure to find us on Apple Podcasts, Spotify, or wherever you listen to podcasts. For AARP's The Perfect Scam, I'm Bob Sullivan.
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