A Georgia man lured elderly and unsophisticated investors into lending his companies tens of millions of dollars, then treated the companies as his personal piggy bank, the Securities and Exchange Commission alleges in a federal lawsuit.
Named in the suit are James A. Torchia and the various “Credit Nation” companies he operates. Among other things, the SEC accuses him of having two companies he controls — Spaghetti Junction LLC and Willie’s West LLC — transfer hundreds of thousands of dollars to him and his wife. He used some of the money to buy his home in Canton, the suit claims, while other money was transferred to an auto dealership owned by Torchia’s son.
Money came from what the agency describes as a Ponzi scheme involving two kinds of unregistered investments: promissory notes, most of which promised a 9 percent return; and fractional interests in life settlement contracts — part ownership in other people’s life insurance policies, also known as “death futures.” But his companies have been losing massive amounts of money and have stayed afloat only by raising more money from investors, the suit alleges.
Torchia’s companies drew investors through advertisements, many aired on the Rush Limbaugh show on AM radio, according to the suit.
The SEC is asking U.S. district court here to issue an injunction to stop Torchia and preserve whatever assets still exist “for the benefit of the victims of Torchia’s schemes.”
“The commission believes that additional victims are being defrauded on a daily basis,” according to the lawsuit, filed Nov. 10.
In response, Torchia says the SEC’s complaint is “grounded in a fundamental misunderstanding of the life settlements business…” and its assets, court filings said. Defendants also deny that Torchia has misappropriated any investor funds, claiming he has never taken a salary but instead has lent money to Credit Nation and collected loan repayments as needed.
A hearing is set for Jan. 7.
Torchia fought with the Georgia Department of Insurance for years after it accused some of his companies of misleading investors in the sale of life settlements. He lost fights to have the state law on life settlements declared unconstitutional.
Florida and Tennessee also had brought enforcement actions against him or his companies, including National Viatical, for sale of unregistered securities.
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