A Pulaski County court filing accuses a Fort Smith associate pastor of soliciting $61,500 from a church member to invest in a fictional, high-interest U.S. Treasury bond fund, and instead spending most of the money on meals, entertainment, clothing and vacations.
“That’s simply not true,” Thomas E. James, associate pastor for St. James Missionary Baptist Church in Fort Smith, said in an interview Friday. “This is the first I’ve heard of it. I haven’t received any information from a court or any attorney or the [Arkansas] Securities Department.”
The court filing Friday by Arkansas Securities Commissioner Heath Abshure prompted a Pulaski County judge to enter a temporary restraining order against James and his company, TJames InvestmentServices. Circuit Judge Alice Gray’s order froze assets belonging to James and TJames Investment and barred them from destroying evidence.
It also set a hearing 10 a.m. Wednesday in Pulaski County Circuit Court, according to Campbell Mc-Laurin III, attorney for the state securities department.
“The temporary restraining order was implemented with evidence we presented, without notice to the defendant,” McLaurin said in an interview. “It was done on an emergency basis to hold whatever assets he might have. Eventually we will file a broader complaint. We know thereare additional investors.”
The complaint accuses James and the company of committing securities fraud and selling securities without being registered with the state.
According to court documents, James was a former broker-dealer agent for Merrill Lynch, Pierce, Fenner & Smith Inc., starting in 2006 until he was terminated and his registration with the state securities department lapsed Sept. 3, 2010.
Between February 2012 and this month, James “repeatedly solicited an Arkansas resident, who is a member of the church where James is believed to be associated as a pastor, to invest her savings with him.” The woman “made at least three investments with James by withdrawing funds from her bank account and having the bank issue a cashier’s check directly to James,” the court filing alleges.
A financial statement from TJames Investment showed the money was invested in a U.S. TreasuryBond Fund that paid a quarterly yield of 23.9 percent. The statement showed the woman received investment income of $16,498.17 for the first quarter of 2013.
The statement also showed TJames Investment was associated with LPL Financial, one of the nation’s largest independent broker-dealers. But an LPL official informed the state securities department that James was not associated with that company, according to the court filing.
Instead of investing the money, “James deposited each of the cashier’s checksgiven to him…into a personal checking account held at Arvest Bank,” the court filing alleges. A review “found that no investments were made by James” and “the vast majority of the money was expended for James’ personal use, including payment for meals, entertainment, clothing and vacations.”
Gray also ordered James and the company to file an accounting that details all funds received from investors and their disposition.
The Arkansas Securities Department continues to investigate, McLaurin said.
Northwest Arkansas, Pages 11 on 04/20/2013