Thursday, May 1, 2003
Attorney General Files Suit Against Houston Pair For Alleged Securities FraudHOUSTON - Texas Attorney General Greg Abbott today announced legal action against a Houston pair accused of defrauding investors of more than $13 million. Defendants Lanny Blake Lown and Lori Ann Franz, who did business as One West Financial Services, allegedly ran a Ponzi scheme that affected about 400 investors, many of whom are refinery workers in the Pasadena area.
An investigation found that Lown and Franz have been operating since at least January 2002 and did not register with the State Securities Commissioner. The couple allegedly claimed they were creating profits for those investors by purchasing processed titanium overseas and then selling it to the United States government and its contractors to be used in submarines and other defense systems. In reality, any profits or returns given to investors were actually funds which Lown and Franz collected from other investors.
The pair also used investor funds for extravagant personal expenses. Lown held the titles to 28 mostly luxury vehicles that were purchased with approximately $1.5 million of investor funds; he also spent approximately $1.2 million for personal jewelry and spent other funds on charter jets, travel and furs. The pair also purchased five Houston homes and bought $600,000 worth of furnishings with investor money.
"These people should be ashamed of themselves for misleading and preying on people who trusted them with their hard-earned money," Attorney General Abbott said. "The investors put their faith and trust in something they believed was legitimate, only to find themselves the victims of obnoxious greed."
Acting on a referral from the State Securities Commissioner, the attorney general's office filed suit against Lown and Franz in Travis County District Court. The Court granted the attorney general's request to freeze all assets derived from the fraud, including bank accounts, real estate and more than two dozen vehicles. The Court also granted the State's request that a receiver be appointed to take possession of all records, property and assets while the case continues. The receiver will also oversee approximately $1 million in cash the Harris County District Attorney's Office has previously confiscated from Lown and Franz. A trial date has been set for August 18.
Investors who may have been defrauded by Lown and Franz should contact the receiver by phone at (713) 523-4032, or on the Internet at www.onewestreceivership.com. Although the affected investors are not expected to get all of their money back, the State's lawsuit asks that they be given consideration if and when the defendants' assets are liquidated.
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