Victim of alleged Franklin financier's Ponzi scheme speaks to protect others
By Kiri Lanice Walton, Staff Writer
A man who said he invested his life savings with reported financial advisor Gordon Grigg of Franklin said Thursday he is speaking up to try and protect other people.
Grigg, former owner of ProTrust Corp. in Brentwood, was charged April 22 with four counts of mail fraud and four counts of wire fraud, based on his alleged role in embezzling more than $10.9 million in client funds, according to federal authorities.
Officials from the U.S. Department of Justice Wednesday filed felony criminal information against Grigg — who is being called Mini Madoff by self-named business ethics expert, Chuck Gallagher. Grigg made an initial appearance last week before Magistrate Judge John S. Bryant.
"Mr. Grigg has cooperated and will be scheduling a change of plea in the near future," said John Webb, deputy criminal chief for the white collar and economic crimes department of the U.S. Attorney's Office in Middle Tennessee.
Grigg, 46, initially pled not guilty, which Webb said is standard during first appearances.
Grigg has been allegedly defrauding clients using his business, ProTrust, since 1996.
ProTrust had offices in Brentwood and in Charlotte, N.C. He was doing business as a financial planner, but according to a January complaint filed against him by the U.S. Securities and Exchange Commission, he "is not currently licensed by or registered with any broker-dealer, or to be associated with any investment adviser."
As part of his scheme, Grigg convinced clients to deposit funds in ProTrust accounts that would be personally managed by him, promising that they would yield high rates of annual returns on their investments.
After "investing" his client's funds, he would then create false and fraudulent account statements to reflect clients' ownership of the nonexistent securities.
Branco Lukich, Grigg’s wife’s uncle, invested $172,000 with Grigg.
Lukich, who lives in San Marcos, Calif., said he is angry and no longer speaks to his sister or Grigg’s wife.
“He’s very charismatic, charming and personable,” Lukich said of Grigg. “He could sell an Eskimo an ice cube.”
In June 2006, the North Dakota Securities Department issued a cease and desist order to Grigg. The order states that Grigg, under his company, engaged in fraudulent conduct and had 30 violations of the state’s century code. Grigg was ordered to cease “from engaging in fraudulent conduct” in North Dakota and “from offering investment advisory services in North Dakota.”
According to the order, from June 2001 to August 2005, Grigg made more than 30 transactions and investments in the account of a North Dakota resident.
ProTrust was then ordered to pay a civil penalty of $570,000 to the North Dakota Securities Department. That fine was outstanding as of Herald press time on Wednesday, according to officials at the department.
Steve Wieland of Davidson, N.C., said he might still have his life’s savings if government officials had sought to obtain payment on the penalty.
"Gordon preys on people who are handicapped and disabled," said Wieland, who has an involved history with Grigg.
Though Wieland has lost hope of seeing any of his life savings back from this, he said he wanted to tell his story because "I want people to listen and question" when making investments.
Wieland said he invested more than $250,000 with Grigg, someone he had invited in his home and thought of as a friend.
"We're done. That's it," said Weiland, a retired U.S. Airways pilot, of himself and the other investors swindled by Grigg.
Wieland was dating a woman he had met shortly after moving to Davidson from Pennsylvania. The woman's oldest son was fathered by Grigg, who wanted to be in the child's life and began visiting from Franklin.
Wieland would allow Grigg to use airline passes he had received to fly down and see his son.
When Wieland lost his pilot's license, pension and broke up with his girlfriend, "Gordon came into my life and preached."
Wieland said Grigg convinced him to allow him to take care of his finances and to give him power of attorney to trade stocks and bonds.
It was a "bad move. A really bad move."
Wieland had persuaded other friends to invest with Grigg, including one man whose doubts about Grigg were enough to push Wieland to start looking into Grigg's practices.
Wieland asked Grigg for documentation on Dec.16, 2008, but Grigg would not respond. Wieland then contacted Morgan Stanley, who informed him they had never done business with Grigg. Wieland received a similar response when he attempted to retrieve information about Grigg from KK&R, an asset management company, who contacted the federal authorities.
In a March 28, 2009, e-mail sent from Grigg's ProTrust e-mail account, he apologized that he had not communicated with investors since the SEC investigation began in January.
"You deserve to know that I have misled you and used the funds that you entrusted to me to pay off other clients, to cover my operational cost, investment losses and for my personal use...I am ashamed that I have hurt you, provided a poor witness for my faith and taken something special like my family, trust, and friendships and treated it with disregard and malice," Grigg stated in the e-mail.
He went on to say, "I am asking for your forgiveness, prayers and undeserved grace. I cannot express the sadness and shame I feel. I will pay you back every dollar you entrusted me with...That is a promise I will keep."
In order to gain the clients' trust, Grigg falsely claimed to have previously committed $5 million in ProTrust pooled client funds for the investment in U.S. government's $700 billion Troubled Asset Relief Program, which helps with the bailout of banks.
Grigg would allegedly use the money for personal benefits, to run Pro Trust and to give an inflated return to investors. He gave $6.6 million of the money he received during this time back to investors who either cashed out or closed their Pro Trust investment accounts.
Posted on: 4/30/2009