NC Ponzi Schemer Files Notice Of Appeal

2:57 PM, Mar 6, 2013   |    comments
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Asheville, NC (ACT) -- A former Asheville businessman convicted of running a Ponzi scheme that cheated investors out of more than $13 million has filed notice of appeal of his sentence.

James W. "Bill" Bailey Jr., 65, received 32 years in federal prison at a hearing last week in U.S. District Court after pleading guilty to securities fraud, mail fraud and filing false tax returns.

U.S. District Court Judge Martin Reidinger said he took the harm to Bailey's victims into account along with the lavish lifestyle financed by his crimes in sentencing him to an amount well above federal sentencing guidelines.

Reidinger called the theft of the investor's life savings "coldblooded."

Bailey also faced possible fines of more than $5 million, but Reidinger said he declined to levy a fine because any money recovered should go toward restitution for his victims. The judge said how much each victim is owed would be determined later. A hearing is scheduled for April 15.

Bailey's notice of appeal filed this week goes to the Fourth Circuit Court of Appeals in Richmond, Va. The notice also seeks court permission for Ronald Payne to withdraw as Bailey's attorney.

As operator of Southern Financial Services on Exchange Street, Bailey for 10 years took money from investors and paid returns with money from subsequent investors - not from actual profits, according to prosecutors.

U.S. Attorney Richard Edwards called the extent of Bailey's fraud "breathtaking."

Edwards said Bailey had a home in Asheville worth $1.2 million and a vacation home worth $1 million that he spent large amounts of money refurbishing.

"He was absolutely living a lavish lifestyle funded by defrauding people," Edwards said.

Bailey dealt in asset management, individual retirement accounts, wills and trusts, court records state. He did not have a license to trade securities and fabricated returns using money from other investors despite telling his customers their investments were earning interest.

The scheme collapsed in November 2010 when Bailey bounced three checks worth $4.8 million. He had moved the checks in and out of his 1031 Exchange Services account at HomeTrust Bank into a Smith Barney account despite knowing that neither account had enough money to support the amounts.

Bailey also must forfeit 12 properties he owns as part of his plea deal with federal prosecutors, along with a Mercedes, Ford truck, motor home and funds in five bank accounts.

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