Original subtitles

In this episode of American Greed, there's no place like home and no

homes like Jeffrey Goldman.

A man of confidence and bold ambition, Goldman says he is an innovative new way

to save desperate homeowners facing foreclosure.

Nobody was better than him and he was going to rule the real estate world.

But this white knight is actually a brazen bandit.

This was my home. It's not my home anymore. They took it from me. And

young upstart Aaron Valette wants to see his name in lights in Nashville,

Tennessee. He saw himself being the next Edward Jones.

He takes $5 .5 million into his investment funds, but his clients don't

dark soul behind this shining facade.

Unfortunately, the best crooks are also the best salespeople.

Albany, New York.

Real estate investment company, Rivertown Financial, claims to be

rescuing desperate homeowners from foreclosure.

But in 2008, one of the company's employees, Tony Urbinas, senses

wrong.

Over and over again, homeowners who have enlisted Rivertown's help receive

notices that their homes are on the cusp of being taken away.

Yet again.

Her penis digs through Rivertown's 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

registering as being proper.

He uncovers falsified loan applications and title transfers not filed with the

county.

When he confronts the company owner, Jeffrey 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 really bothered me.

So I said, well, laugh when the attorney generals are knocking on your door.

When the Attorney General's office investigates, they find a company in

Chappell.

Families split apart.

And dozens of homeowners facing possible eviction from their homes.

When Katie White begins working at Rivertown Financial as a paralegal in

the fledgling enterprise consists of only company owner Jeff Goldman, his

younger brother Jonathan, and attorney Kevin Wheatley.

Though modest in size, White says the company is brazen in its ambition.

And no one's brassier than its owner, Jeff 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 real estate world.

Tony Urpinas begins working for Rivertown Financial in 2006.

He was a heck of a salesperson.

You can see that.

There was a belief system in what he was promoting. He was promoting his

product. His product is an innovation he creates for distressed homeowners

called the Lease Back Program.

He hypes it to her Venus as the ultimate win -win real estate innovation, a way

to turn a profit while helping homeowners facing foreclosure save their

Their premise was, are you in foreclosure? We can help you out. Are

tough time? We can help you out. Everything that has to do with we can

out. In theory, Rivertown would basically rent out the home to the

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.

The homeowner agrees to pay more to repurchase the home than what Rivertown

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, it's like, okay, the House of Mind, they're just going to help me out

a year, and everything will be back.

It's normal.

June and Donald Buckland have lived in their two -story home in Yonkers, New

York, since 1988.

They've raised a son there and paid their mortgage faithfully for more than

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

So I was out of work for...

a pretty long time.

My husband also became disabled, and we decided that we're going to try to

refinance to sort of help us out.

Rivertown Financial offers hope.

Jeff Goldman and attorney Kevin Wheatley meet with the Bucklins and explain the

lease -back program.

We told them all our problems, you know, and they were very sympathetic, and

they were willing, they were ready and willing to work with us.

Unfortunately for the Bucklands and nearly 50 other homeowners signing up

the leaseback program, Rivertown isn't working with them. They're 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 doesn't happen.

Jeffrey 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.

The Bucklands supposedly have $148 ,000 of equity waiting in trust from their

sale. They'll never see it again.

And that's 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 it to be her company.

In Albany, New York, real estate investor Jeffrey Goldman claims he can

savior for homeowners facing foreclosure.

His company, Rivertown Financial, enlists dozens of homeowners into their

-back 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 Jeffrey just saying, basically, give me your

money.

Rivertown Financial tells clients that the equity from their home will be held

in trust for them, but it's actually just being funneled into their own bank

account.

Reporter Robert Gavin covers Rivertown Financial for the Times Union in Albany.

That's stealing.

Really, when it comes down to it, that's what you're doing. You're stealing

money.

It's not just Jeff 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 they'd come in, you could

tell that they'd been out partying for quite some time.

There was money that went for, like, wine lockers. There was money that went

a cruise. I think there was a trip to Antigua.

This is where the money from destitute people, this is what it paid for.

Audrey and James Williams move into their five -bedroom home in Mount

New York, in 2002.

They have a $223 ,000 mortgage that they pay regularly.

But in 2007, they fall on hard time.

I was getting a little bit sick and I didn't know why, so I was missing time

from work.

And the doctors couldn't find why, you know, I was sick.

Doctors come to discover Williams has ovarian cancer. It means chemotherapy

times a week, and Audrey can't continue working.

It's a strain on their budget.

But they want to keep the house that they've 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 we were going to let this

house go. This was our retirement fund. So we decided then we needed to lower

the mortgage.

So in the process of looking and making phone calls, these people turned up.

These people are none other than Rivertown Financial.

The Williams aren't interested in the lease back program, just a simple

refinance. And Rivertown says they can help.

When it comes time to make the deal, Jeff Goldman makes a personal

When they walked in, and I remember looking at him, he had jeans and pink

and he had these nice Italian loafers on, and I thought to myself, oh, my God.

Bloodshot red eyes.

Yeah, and James said, this doesn't feel right.

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.

But at the closing, Goldman doesn't bring refinancing paperwork.

He brings sales paperwork.

It's something a lawyer would notice immediately.

But Goldman convinces the Williams they don't need a lawyer.

It was so smooth.

This is a simple transaction.

You don't need a lawyer because a lawyer is going to 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.

The Williams leave the closing thinking they have refinanced for $270 ,000, when

in reality, they've 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 don't see a dime.

To make matters worse, thanks to their executives' extravagant spending,

Rivertown Financial isn't making all their mortgage payments and loans are

into default.

It got to the point where they're calling people whose homes were sold to

Rivertown, calling, I'm getting notices my mortgage is not getting paid. I'm

getting notices my taxes aren't getting paid.

It's in our agreement you're going to pay these.

And I'm going to lose my home now for good.

The company's office dynamics are in upheaval as well, with the introduction

a new employee, 24 -year -old Jessica Perrier.

She was hired as a marketing person.

However, gradually, her role changed completely, and she kind of ended up

as, I guess you would say, an assistant to Jeffrey, into a role where they

became very close and started dating.

According to White and Tony Ervinas, the affair between Perrier and the married

Jeff 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, whining and dining her,

it was very, very evident.

Inside the office, however, Perrier's 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

than Jonathan's opinion or Kevin's opinion.

It leaves White and Ervinas with the sense that the company is coming undone

the seams.

Jeffrey's younger brother, Jonathan, quits abruptly.

And on top of that, the leaseback program is falling apart.

White and Ervinas begin putting their heads together to get to the bottom of

We just knew something was not going on right.

We could tell. There's a lot of money coming in on a monthly basis from all

different clients.

And it wasn't going towards the intended purpose.

It was going into gambling and partying instead.

But the party's about to end.

When American Greed returns, white interveners bring the attorney general's

office to Rivertown's door for a $5 .7 million fraud.

But in court, it's 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 Albany County Court.

In Albany, New York.

Tony Urbinas and Katie White are doing some amateur sleuthing into their

employer, Rivertown Financial.

And they don't like what they see.

I'm doing some math.

Tens of thousands of dollars coming in on a monthly basis for all those

properties. And the money's not going towards paying the mortgages, paying the

insurances, paying the taxes on each and every one of those properties. So it's

just going into a big kitty.

Neither of them knows the exact mechanics of the fraud, but in 2008 they

upon themselves to reveal the inner workings of the company.

When you start adding the blatant spending of money on high -end

toys, on trips, on lavish

parties, I was not liking things at that point.

Herbenus confronts Goldman about his concerns, but gets no response, other

that conference call from Goldman and Wheatley telling him he's fired.

Hours later, Herbenus contacts the New York Attorney General's office and blows

the whistle on a possible fraud at Rivertown Financial.

So it was very easy for me, and I don't know if it was for you as well. I didn't

have to think twice. It was definitely what I thought was the right decision.

It was the right decision. It was.

Once the Attorney General starts its investigation, Jeff Goldman can

see the writing on the wall.

By the end of 2008, with dozens of clients depending on Rivertown to save

homes and Rivertown's bank accounts drained by their lavish spending,

shuts the company down.

Since enrolling in Rivertown's lease -back program in 2006,

June Buckland has endured heartbreaking traumas again and again.

In 2007, her 99 -year -old mother -in -law is living with her and her husband

when he dies suddenly of a heart attack.

So that left my mother -in -law and myself.

And I was working two full -time jobs.

So I had a 9 -to -5 job and a 5 .30 to

2 .30, sometimes 3 o 'clock job.

During this turbulent time, Buckland injures herself at her night job at a

casino and can no longer work there.

She collects workman's compensation but has trouble making ends meet.

Then in 2012, Buckland comes face to face with Rivertown's final crippling

injustice.

There was a notice on the door saying that the property is now owned by Fannie

Mae.

And I have to contact them.

Rivertown still owes $390 ,000 on the mortgage they took out when buying

Buckland's house.

Even though Buckland had been paying rent faithfully to Rivertown for years,

with Rivertown gone, she's left with no real recourse.

There was a notice on the door saying that I have to

evacuate the house in a matter of days.

On January 17, 2013, Fannie Mae takes ownership of the house she's spent

three decades making into a home.

Yeah, a lot of memories.

A lot of memories, yeah.

We've been through quite a bit in that house.

Yeah.

Audrey and James Williams know how she feels.

Fannie Mae also owns the loan that Rivertown took out on their home.

But the Williams protests that the loan was obtained fraudulently.

Fannie Mae lawyer said, we don't care. We don't want to hear about it.

You want to stay in your house. You want your house. You'll give us over $500

,000.

Fannie Mae declined to comment to American Greed. But the circumstances

tremendous stress on Williams, who continues to get chemotherapy treatments

times a week for her ovarian cancer.

Then, just after Christmas 2013, the Williams get their eviction notice.

This was my home. This is not my home anymore.

They took it from me. James and Audrey Williams return to their old home for

first time a month after their eviction.

This was my porch that we used to sit.

We had our furniture out here.

Watch the world go by.

I painted this whole house myself.

All this I did off my own.

With my own hands.

The end result is what we are now.

I'm at my mom's house.

It's not a good look.

In the springtime, I'll come get my son.

I know.

I have to wait until the springtime.

I know.

Can't do nothing now.

No, it's too cold.

It's been one nightmare.

After nightmare, after nightmare.

And we're still going through nightmares.

I didn't know it was going to be so hard coming here.

It's all gone.

Take your life.

More than 50 Rivertown clients and lenders are affected by Rivertown's

that costs at least $5 .7 million.

Jeffrey Goldman pleads guilty to grand larceny and scheming to defraud.

On December 5th, 2011, he stands before an Albany County judge for sentencing.

I don't know that I've ever seen a guilty plea and sentence quite like

Goldman. He actually said the words, I'm a good person, and while I have

committed crimes, I'm not a criminal. And by the way, my brother, who's

cooperated in this, Everyone thinks he's the good guy and I'm the bad guy, but

that's 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.

That's not something you hear at a criminal sentencing.

You pled guilty.

His brazen attempt to justify himself does not impress the judge.

Goldman receives 4 to 12 years in prison. His co -conspirators also get

including his brother Jonathan, 16 months to 4 years for scheming to

Kevin Wheatley, 3 1⁄2 to 10 1⁄2 years for grand larceny and scheming to

And Jessica Perrier, 1 to 3 years for grand larceny. The four are ordered to

a total of almost $5 .7 million in restitution.

But with all their money squandered on their lifestyles, it'll be a long road

pay it all back.

We get a check every month between $3 and change to $7 and change.

We had a huge one in September.

That was at $67?

$67.

Come to your balcony.

$7 .20.

It is the amount of the check.

Written out to June and Donald Buckland.

I know, James.

What can I say to you? I don't know.

One day at a time.

Just one day at a time.

One day at a time.

I know you don't want to hear that sometimes, but... Me? Look at me.

One day at a time.

Yeah, one day at a time.

Okay.

Up next, a Nashville financial advisor wants his company's name in lights and

doesn't care who gets slammed to pay for it.

I had found out later that they worked on disabled children.

It's kind of like, how could you do this to someone?

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, Erin Vallette, is in the news.

According to federal officials, Vallette spent some of it. 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.

Elkins Company does record -keeping for A .D. Vallette & Company.

a financial advisory firm in Nashville, which has just been slapped with a civil

complaint from the Securities and Exchange Commission for allegedly

.5 million fraud.

Honestly, my immediate thought was, oh, my God.

That is why he called me to transfer the money.

Just months earlier, Valette had Elkins transfer nearly $900 ,000 out of

clients' 401K plans and into his brokerage account.

And now she fears she may have unwittingly allowed Valette to steal

retirement savings.

I really did kind of think twice, but at the same time, I'm like, well, this is

Aaron. He's the president of the company.

I don't want to lose my job, but...

In hindsight, if I knew what was going on, I would have locked my job that day.

Clients pick us because they know when they come to seek financial advice or

portfolio management, we are going to put into action all of the products, all

the process, all the services that we feel are necessary to accomplish a very

specific objective to the client.

The star of this promotional video is Nashville native Aaron Valette, who is

just 28 years old when he opens A .D. Valette & Company in 2006.

And his sights are set on becoming a major player in the financial planning

world.

Wesley Washington meets Valette through mutual friends a few years before

Valette starts the company.

Even then, however, Washington says Valette's drive to succeed is obvious.

Worked and called me early in the morning, called me late in the evening.

pretty much working.

The two quickly become friends.

And around 2007, Valette suggests that Washington transfer his entire

portfolio over to his management.

And I was fully on board with all that because, again, he had done well by me

as far as being trustworthy.

everything I knew about him seemed on the up and up.

We're going to find out what is important to our clients, and we're

able to advise, consult, and help place those services and products to our

clients, whatever that may be.

By 2008, Villette has dozens of clients like Washington taking fees for managing

and operating advice on 401ks, IRAs, and general investment portfolios.

But that's not enough for the self -promoting entrepreneur trying to burst

the scene.

He opens up his own investment fund called the Collateral Fund.

The three -month secured short -term note would return 5%. If you were

to go up to a year, it would return 6%. Sean Murnahan and Graham Loomis are

attorneys with the Securities and Exchange Commission in Atlanta.

They say the returns Valette 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

you're going to get returns that are better than the market, that's a

It's very rare that you get good returns and safety in the same investment.

Over the next year and a half, Vallette 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. Vallette 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 substantial return.

And that didn't happen. He didn't invest that money. He used it for his own

personal gain.

When American Greed Returns.

A charity that runs a camp for sick children is a perfect opportunity for

insatiable Mr. Valette.

Was this the first time that Valette operated on the wrong side of the law?

out at AmericanGreed .CNBC .com.

Feeling greedy?

Want more than your shared behind -the -scenes dirt?

Follow us at AmericanGreedTV on Twitter. We'll be right back.

In Music City, USA, Nashville, Tennessee, financial advisor Aaron

putting on the performance of his life.

A .D. Vallette and Company, everything financial.

He saw building this brand, A .D. Vallette brand, to be a big brand.

He saw himself being the next Edward Jones.

We provide everything financial. We want to be a one -stop shop, full service,

financial services company.

A .D. Valet and Company handles companies' payrolls, manages their

oversees individuals' investment portfolios. But to be a household name,

needs to raise his profile.

In 2009, he pays $320 ,000 to become known as the exclusive investment

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. Villette Center when that contract came

up. And that's what his plan was.

Of course, he's 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. 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 well

-established neighborhood.

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

all above board.

It's far from above board.

But up until late 2009, Valette has only been stealing money from investors in

his collateral funds.

His advisory clients, people with IRAs, 401ks, and investment portfolios, people

like Wesley Washington, have been spared. But that changes for Washington

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

$100 ,000 equity in that house.

And so I had that cash to invest.

As a commission -based job recruiter and a brand -new father, Washington

emphasizes to Valette that he needs a secure and accessible investment.

I had to keep this cash liquid.

I had to keep it safe.

I couldn't put it in anything risky. I might need it. I mean, I might need it,

all of it.

A young father himself, Millett says he understands Washington's situation and

comes back with a plan.

And this plan had eight steps, and the first step was to put this cash to work.

Millett 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 didn't have a reason not to trust him, so that was where it

went. But that's not where the money stays.

It was pretty clear from the bank records. You could see money coming in

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.

But even all the money in the collateral fund can't cover how much Valette

spends.

Roger Murdy is a retired Army colonel. Jenna, what are we doing? In February

2008, he opened 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 they're going to need to get through the

weekend or the week of summer camp, we're able to provide.

It not only gives these children an opportunity to play, but to see their

conditions in whole new ways.

They're with 125 other children with the same condition.

They can see that there is life after every procedure in these illnesses, and

it's a wonderful place for friendships to be born. So everybody here this

weekend has a child with a cardiac issue, either a heart transplant,

recently replaced valves, whatever it might be.

We know we can't 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.

In the fall of 2008, Murdy is looking for someone to manage a 401K program for

his employees and finds Aaron Vallette.

He seemed like a very conscientious young man who had a successful business

and a successful business, and we were looking forward to becoming part of it.

Just a few weeks after meeting him, 17 employees of Courageous Kids have their

401ks under Valette's management, including Murty and his wife.

And the relationship goes both ways.

Valette seems genuinely interested in helping Murty's 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

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.

He wouldn't be as thrilled if he knew what Aaron Ballett was doing behind the

scenes. By the end of 2009, he's burned through most of the money from his

collateral fund investors.

Now he's set his sights on the 401K clients.

He reaches out to the company handling his record -keeping 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 401K account into a brokerage or

outside asset brokerage account because I'm going to be managing their money on

the outside.

Elkin says it's a common practice. The problem is, Valette is lying.

The client knows nothing about the transfer.

Valette is simply taking the money from the 401K to put into his own business

account to spend as he pleases.

About two weeks later, same thing. You know, this person's 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. Valette Financial Group.

He pulls the scam on 12 different investors for a total of almost $900

including transferring $59 ,000 out of Roger Murdy's 401k without his

permission. On client statements, the transfer is simply listed as an outside

brokerage, but the balance of the 401k itself doesn't appear depleted.

Murdy confesses that he doesn't notice the change on his account, but one of

Valette's clients does and alerts the Tennessee Department of Security's of a

possible fraud at A .D. Valette and Company.

They were paying attention and took one person with one call to start the ball

rolling. When American Greed returns, law enforcement surrounds Valette from

sides. But he doesn't seem sorry, just sorry for himself.

Now, does he really believe that he's the victim? I mean, it's my money that's

gone.

By early 2010, financial advisor Aaron Ballett is reaching into his clients'

pockets to feed his company's image and his personal lifestyle.

But according to John Webb of the U .S. Attorney's 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.

The Tennessee Securities Division contacts FINRA, the Financial Industry

Regulatory Authority, which starts to dig into Valette's records.

They quickly find that Valette's collateral fund has no collateral.

Without his clients' money, he's worth practically nothing because he's living

off the clients and the money that they invest.

He's operating his business off of the clients and the money that they invest.

He has very little money of his own.

But his clients do have money, and Valette tries to pretend it's his.

Mr. Valette attempted to use the income statement 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.

It makes it look like he has $5 million sitting in his account.

So it was a very easy step, something, a basic investigatory step.

FINRA called the brokerage firm and asked them to provide the original

statements for these.

Lo and behold, when it comes to them, they say it's the name of the client,

Mr. Vallette.

FINRA alerts the SEC, which begins its own investigation.

It's a very basic step. We get the bank records because those don't lie.

That's where we saw the investor money coming into the account and going out to

pay his personal expenses.

On June 2, 2010, the SEC files a civil complaint in federal court in Nashville,

and the judge issues a temporary restraining order against A .D. Villette

Company.

When LaDonna Elkins finds out, she immediately gets on the phone to warn

Villette's clients.

My initial fear was that they could think I had something to do with it.

But then immediately, it's like, I really don't care. I'm calling them.

need to know this.

One of the calls goes to Roger Murdy's TFO, who discovers that Valette took $59

,000 from Murdy's 401k account.

Murdy calls Valette soon after to ask about the transfer.

He suspects Valette will lie to him and gives him just enough rope to hang

himself.

He said, basically, I'm sorry, that's 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.

Asking Murdy to predate the forms is an obvious attempt by Valette to cover his

tracks, not to mention illegal.

He even tries to sweeten the pot.

She 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 it's a little late at this point.

Wesley Washington had previously taken $15 ,000 out of his investment in the

collateral fund.

But after hearing about the complaint, he wants Follett to explain what's

happened to the $85 ,000 he left in there.

He said, all your money's in there. It's frozen right now, but it'll give me a

month. It'll be taken care of, and you'll get all your money back.

Washington was saving that money for his and his family's future and for the

possibility of starting his own business.

He wants to believe it when his friend tells him it's not lost, but it gets

harder with each passing day.

I was holding out hope that I'd get my money back and that the money was

actually there.

And then, of course, there's that just thinking feeling that, you know, you've

been swindled.

Washington appears to grasp the situation much more firmly than Billette

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.

It's time to, you know, just fess up.

It's a type of delusion that Sean Murnahan sees personally.

During a meeting at the courthouse, Valette harkens back to his college days

Colorado.

He reveals during the course of our conversation that he had at one point

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 didn't realize how serious it was.

He didn't understand he was likely going to jail.

More than likely.

In February 2012, the U .S. Attorney's Office files criminal charges against

Villette. And Wesley Washington finally gets his wish to see him fess up.

Valette 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 401K plans to be backed by a fidelity bond,

all of Valette's 401K clients are actually made whole.

The 20 clients in Valette's investment funds aren't as lucky.

I could have taken that $100 ,000 and gone and bought a car and to have it

after I worked hard.

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.

After being burned by a man he considered a friend, Washington now has

issues.

I mean, he was a buddy. He was, you know, a trusted advisor.

Makes me think I do not need to do business with friends, really. I mean,

almost feels like it'd be better to put it in a coffee can in the backyard.

Next, a tech tycoon with a background in banking burns to be a big player in the

NHL. And a $100 million payout.

American Greed, scams, scoundrels, and suckers.

Next on CNBC.

Don't get taken. Be a part of the conversation on Twitter. Hashtag

Greed.

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