AJC Watchdog: First Alert

Keeping watch on those who hold the public trust and money

Federal judge not buying alleged Ponzi scheme operator's promises


Jim Torchia said the federal government just doesn't understand what he does for a living. The Woodstock businessman buys life insurance policies from elderly and dying people, then sells them to investors looking to reap big profits when the insured people die.

No one knows the business better than him, Torchia said. He's not running a Ponzi scheme, he contended, and his investors from across the country – many of them elderly and unsophisticated – aren't going to lose their life savings.

“I can tell you, I’m totally relaxed with it,” Torchia said in January of the U.S. Securities and Exchange Commission's lawsuit against him alleging fraud, “because I’ve done nothing wrong.”

U.S. District Judge William S. Duffey Jr. didn't buy it. Now Torchia's Credit Nation network of investment companies, subprime auto loan businesses and limited liability companies are in the hands of a receiver. Read more about Duffey's decision and what it means for Credit Nation in this story at myAJC.com.

The SEC accused Torchia of misleading investors about the financial stability of his companies, which the government asserted were actually teetering on the verge of collapse.

The allegations have investors such as Elizabeth Ann Daugherty, an 84-year-old widow living in Dunwoody, fretting their financial future. Daugherty said she considered Torchia a kind, upstanding businessman and has about $250,000 invested in his companies. She sends him a Thanksgiving card every year, she said.

“I pray that this is not going to fall apart,” Daugherty said, “because that will hurt me terribly.”

After a January hearing in which Torchia assured Duffey that everything was just fine with Credit Nation, the judge spent months crafting an 87-page preliminary injunction order that eviscerated Torchia's arguments and his courtroom performance. Duffey found him insincere and incorrigible, his order says.

Torchia's incessant litigiousness, which The Atlanta Journal-Constitution described in an in-depth report published in February, also played into the judge's decision:

" ... Credit Nation has operated at a loss for years, its liabilities substantially exceed its assets, and its financial situation is deteriorating. Defendants' continuing financial and management issues support a reasonable likelihood of future securities violations. To the extent Mr. Torchia claims he is seeking to reform his companies' operations to comply with SEC requirments, the Court does not believe him. Rather his 'fight to the death' approach to business and court obligations ... supports that reform is not reasonable to expect."

This year, the AJC has reported extensively on Torchia's operations and how hundreds of investors have been put at risk.

An AJC investigation published earlier this month revealed that Georgia Insurance Commissioner Ralph Hudgens was repeatedly told in recent years that Torchia was operating without a license, and that his fraud unit investigators had evidence that Torchia's company advertised directly to Georgians, offering quick cash for rights to insurance payouts.

But Hudgens didn’t act to stop him, the AJC found.

Read more about Torchia's latest troubles and who all he is suing at myAJC.com.

 


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About the Author

Johnny Edwards is a member of the AJC’s investigative team, focusing on the private sector and state and federal regulation. He has worked at the newspaper since 2010.