Federal and International

Tennessee CEO Sentenced to Serve 14 Years in Prison for $18 Million Ponzi Scheme

Washington, DC—(ENEWSPF)—August 15, 2014. The former chief executive officer of Hanover Corporation was sentenced today to serve 14 years in prison, to be followed by three years of supervised release and ordered to pay $14,784,983.75 in restitution for orchestrating an $18 million Ponzi scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney David Rivera of the Middle District of Tennessee, Special Agent in Charge Todd McCall of the FBI’s Memphis Division and Special Agent in Charge Christopher Henry of the IRS-Criminal Investigation in Nashville made the announcement today after the sentence was handed down by U.S. District Judge Todd J. Campbell in the Middle District of Tennessee.

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According to court documents, between January 2004 and August 2006, Terry Kretz, 61, of Gallatin, Tennessee, offered clients the opportunity to invest in Hanover through promissory notes bearing high interest rates.   Kretz told clients that their money would be used for specific purposes, such as investing in stock options and startup companies.   In fact, however, more than half of the money invested in Hanover went to repay earlier investors, to pay Hanover’s salaries and overhead and to fund personal luxuries, including Kretz’s purchase of a $600,000 residential building lot, a $176,000 contribution to a church, and golf memberships.

Kretz’ co-conspirators, Daryl Bornstein, a Hanover salesman, and Robert Haley, Hanover’s chief financial officer, previously pleaded guilty to similar charges and are scheduled to be sentenced on August 25, 2014.

The case was investigated by the FBI, IRS-CI, the Tennessee Bureau of Investigation, and the Tennessee Department of Commerce and Insurance.   The case is being prosecuted by Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Scarlett S. Nokes of the Middle District of Tennessee.

Source: justice.gov

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