A former McNair attorney and a North Carolina financial adviser were accused of taking $3.5 million from 35 investors, the Securities and Exchange Commission announced Thursday.
The SEC accuses M. Mark McAdams of Myrtle Beach and R. Dane Freeman of Flat Rock, N.C., of luring investors to their firm, South Carolina-based Global Holdings LLC, with promises of returns as high as 4,900 percent in just two months.
During much of 2008, Global Holdings told investors it bought bonds from issuers at a discount and then quickly resold them for a profit internationally, the SEC said in a statement.
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Investors also were told Global Holdings had completed hundreds of transactions that produced hundreds of millions of dollars for investors and that Global Holdings had invested $2 million of its own money and earned at least $200 million, authorities said.
The claims were not true, the SEC said.
Global Holdings never purchased or sold bonds, and investors never received promised profits, said the civil complaint filed in federal court in Columbia.
Instead, some of the money went to pay Freeman's debts and was given to some of his family and friends, the SEC said.
McAdams, who was an attorney with McNair in Myrtle Beach, used the firm's letterhead and e-mail system to conduct Global Holdings business. The firm did not have knowledge of McAdams' activities, authorities said.
"We do not condone what he did," said David Tigges, the Columbia-based firm's managing shareholder.
His work with Global led to his resignation from McNair in August 2008, the complaint said. Global, which had started in January 2008, was dissolved by that October.
Freeman worked for several stock and investment firms but either resigned or was fired for failing to follow company policies, the complaint said.
Efforts to reach Freeman and McAdams on Thursday were not successful.
The SEC wants the pair to reimburse investors and pay an unspecified amount of fines.
The SEC said it received help in the case from the S.C. Securities Division.
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