Torchia and his attorneys did not respond to an email from The Atlanta Journal-Constitution asking for comment Monday.
The preliminary injunction Duffey issued Monday said Torchia was operating two investment schemes. In one, Credit Nation sold fractional interests in life insurance policies purchased from terminally ill and elderly people. The other scheme involved promissory notes that were said to be 100% asset backed and promised 9% annual returns.
Torchia and his attorneys argued that the insurance polices weren’t securities subject to SEC rules, and that the promissory notes were exempt from regulations limiting their sale to well-heeled investors.
Duffey rejected both arguments as well as Torchia’s contention that he, not the SEC, knew best when it came to how to value the life insurance policies.
Torchia employed untrained, uncertified employees to keep his companies’ books, Duffey noted. Torchia himself “struggled to provide a coherent explanation” of how he decided how much to pay for policies, “and his answers were often evasive …,” the judge wrote.
To try to prop up Credit Nation’s finances after the SEC began investigating, Torchia and his companies paid $6 million for policies that he claimed could quickly have sold for at least $35 million. “Extraordinary ‘wishing it were so’ claims like these require evidence to support them, which is not in the record here,” Duffey’s order said, calling the claim “arbitrary valuation sleight of hand, offered by a CEO whose testimony was not credible …”
Walter Jospin, regional director of the SEC’s Atlanta Regional Office, said he could not comment on a pending case other than to say “we are very pleased with Judge Duffey’s ruling.”
Michael Elfert, who lives in Odessa, Texas, invested more than $450,000 in Credit Nation last year after hearing an ad on a radio talk show. He moved the money over from his 401(k) account, from his career as an oil field worker, and he planned to retire next year.
Credit Nation never missed a quarterly interest payment, Elfert said.
“It’s probably going to change now, now that the judge is getting involved,” he said. “I stand a chance to be in bad shape, going into my retirement.”
Torchia has been the focus of various state investigations over the years as he offered life settlement investments. Florida fined him $120,000 for selling unregistered securities and said he “repeatedly demonstrated incompetence.”
But Torchia has used incessant litigation to fend off regulators and foes alike. Even Duffey noted Torchia’s “fight it to the death” approach to business and court obligations.
After the Georgia Department of Insurance raided his office in 2001, accusing the company of selling insurance without a license and misleading investors, he challenged the search warrant and the department backed off. He also has been locked in litigation with his former CFO, his former pitchman, former salesmen and a pair of Canadian businessmen.
Earlier this month, he sued the AJC, alleging defamation in an article published in February.
None of his companies, nor Torchia himself, nor anyone working for him, has Georgia licenses to buy life insurance policies, advertise to residents, negotiate with policyholders or broker deals, an AJC investigation found.