A former New York Life Insurance Co. agent pleaded not guilty in a federal court in South Carolina yesterday following charges that he had swindled 35 investors out of more than $2 million over 13 years.
A former New York Life Insurance Co. agent pleaded not guilty in a federal court in South Carolina yesterday following charges that he had swindled 35 investors out of more than $2 million over 13 years.
Facing a seven-count fraud indictment, Oren Eugene Sullivan of Rock Hill, S.C., yesterday signed a document stating that he wasn't guilty of the charges, and was released on a $100,000 unsecured bond.
Assistant U.S. Attorney Nathan Williams is bringing the case against him in the U.S. District Court for the District of South Carolina, Rock Hill division.
According to the complaint, between 1995 and 2008, Mr. Sullivan sold agreements he dubbed “private-placement promissory notes,” “private annuities” and “floating-rate notes” to clients.
After giving him their money, the clients were told that they would receive a certain rate of interest and that their principal would be returned to them in whole or in installments in the future, according to the complaint.
Instead, Mr. Sullivan deposited more than $2.5 million of the investors' cash into his bank account, using some of the principal to make payments to the clients via money orders, and the rest was used for his own purposes, according to the complaint.
He faces a maximum fine of $250,000 and 20 years in prison for each count if found guilty.
Mr. Sullivan, who had been with New York Life since 1976, has been punished by the authorities in the past.
Last month, the Financial Industry Regulatory Authority Inc. barred him from the securities business after discovering that he had been writing up the fictitious promissory notes.
The criminal charges awaiting Mr. Sullivan are separate from Finra's punishment.
According to his records on Finra's BrokerCheck, Mr. Sullivan took about $3.7 million from clients and paid back about $1.5 million after the scam began to unravel.
NYLife Securities LLC reimbursed more than $2.1 million to customers and is now suing him for repayment.
“The company fully investigated the matter and reached out to all of Sullivan's clients, meeting with them personally and reimbursing victims of his Ponzi scheme who mistakenly thought they had invested with New York Life,” said company spokesman, William Werfelman.
Other complaints abound, including the notice of Mr. Sullivan's November termination from New York Life following allegations that he had misappropriated $10,000 from a client in 2005.
The money was supposed to go toward establishing a Section 529 college savings plan, but the client found out that the plan was never set up. That investor received a refund plus interest last September.
Mr. Sullivan was also named in a recent civil case filed by his brother William Sullivan. From 2003 to 2009, the agent allegedly took $250,000 to be invested in some New York Life products, according to the complaint. New York Life was also named a defendant in William Sullivan's civil case.
"We interviewed [Wiliam Sullivan's] on more than one occasion and learned that he was aware that these investments had nothing to do with New York Life," said Mr. Werfelman.
"Therefore we concluded he was not entitled to reimbursement from us."
That case, filed in the U.S. District Court for the District of South Carolina, Columbia Division, is still pending.
Oren Sullivan's lawyer, James Mixon Griffin, didn't immediately return a phone call seeking comment.
