Plains, Mont., man lost $55,000 in hurricane relief scam
July 9, 2012
HELENA, Mont. – Commissioner of Securities and Insurance Monica J. Lindeen today announced the first beneficiary of the state's new securities restitution fund, a pool of money set up to help victims of investment fraud. Reece Cobeen of Plains, Mont., a victim of a hurricane relief investment scam, will receive $13,750.
"Reece lost his life's savings in trying to do a good thing for the people of Louisiana," said Lindeen. "I'm proud to be able to help Reece recover a portion of what he lost and help him get back on his feet."
At Lindeen's request, Montana's 2011 Legislature created the Securities Restitution Assistance Fund to aid victims who will never recover their stolen money. The fund, which is made of court-ordered contributions from white collar criminals, is the second of its kind in the nation. Already, Lindeen's office has collected more than $250,000 for the fund from brokers and firms who have violated state securities law.
Cobeen had invested $55,000 in phony promissory notes advertised and sold by Terry Parks in 2007. Parks told Cobeen his investment would help rebuild homes in Louisiana that were destroyed by Hurricane Katrina. Parks promised Cobeen a 24 percent annual return on the investment.
Over the course of several months, Parks encouraged Cobeen to send more money and offered to pay Cobeen $100 for each new investor he could refer to Parks. When Cobeen grew suspicious and tried to get his money back, Parks refused.
Lindeen's office prosecuted Parks on three counts of securities fraud, and in October 2011, Parks was sentenced to 20 years in state prison. Parks is currently serving time in at the Montana State Prison in Deer Lodge.
When Lindeen's office prosecutes cases of investment fraud, making victims whole is always the first priority. Sometimes, however, the stolen money is gone, leaving victims little hope of getting their money back. Parks has spent all of Cobeen's money and is currently incarcerated, making payment of the $55,000 court-ordered restitution impossible.
Victims of securities fraud who have no opportunity to receive restitution, like Cobeen, can apply to receive 25 percent of the money they lost or $25,000, whichever is lesser, from the Securities Restitution Assistance Fund. Additional restrictions on the maximum payment from the fund apply when the fund's balance falls below $1 million.
The Commissioner's office expects many more applications for assistance in the coming weeks from victims of the Cornerstone Financial Ponzi scheme in Kalispell. That scam robbed Montana investors of more than $14 million.
For more information about the securities restitution assistance fund, call 800-332-6148 or visit the Commissioner's website at csi.mt.gov/securities/restitution.asp.