Jury finds accused Ponzi scheme operator not guilty of fraud

The federal government has already dismantled Jim Torchia’s Credit Nation empire of investment companies

Cherokee County businessman Jim Torchia, accused of misleading investors in an alleged Ponzi scheme that involved buying life insurance policies from people with short life expectancies, has been found not guilty of criminal fraud.

On Monday a federal jury cleared him of conspiracy to commit mail and wire fraud and six counts of mail fraud. A statement released by his defense attorney Tuesday said Torchia was acquitted because the evidence showed his companies were not a Ponzi scheme and he did nothing improper or illegal.

Meanwhile, Torchia’s former attorney and adviser, Marc Celello, has already pleaded guilty in the case to one count of conspiracy to commit wire fraud and is scheduled to be sentenced next month. The federal government called Cellelo an active participant in fleecing investors, and he testified against Torchia during the two-week trial as part of his plea deal.

The two had sat atop Credit Nation — a once-lucrative empire of subprime auto loan businesses and investment companies whose profits hinged on life settlements, or viaticals, a niche industry that involved buying the rights to life insurance polices from the elderly and terminally ill, then betting they would die before investors had to pay too much in policy premiums.

Over the years Torchia faced accusations of breaking the law, but he used incessant litigation to fend off state regulators and business foes. He hired Celello away from the Georgia Secretary of State’s Office in the belief that he could help keep regulators at bay. A 2016 investigation by The Atlanta Journal-Constitution found Torchia’s litigiousness had kept the Georgia Insurance Commissioner’s Office off his back, even though former Commissioner Ralph Hudgens had been repeatedly told that Torchia was violating state law by buying life insurance policies without a license.

Torchia finally met a more formidable opponent in the U.S. Securities and Exchange Commission, which filed suit in 2015 accusing him of exploiting elderly and naïve investors by promising fat profits, bolstering his lifestyle in the process. Torchia long maintained that none of his investors ever lost money while he controlled the companies, and that the federal government just didn’t understand the viaticals business like he did.

“I have never done anything dishonest in my life,” Torchia once said in an email to a former salesman he was suing. “So the SEC can go (expletive) themselves.”

In 2016 a federal judge sided with the SEC and appointed a receiver to try to return some $10 million to dozens of Credit Nation’s investors, breaking up the network of companies.

“To the extent Mr. Torchia claims he is seeking to reform his companies’ operations to comply with SEC requirements, the Court does not believe him,” U.S. District Judge William S. Duffey Jr. wrote in his decision. “Rather his ‘fight to the death’ approach to business and court obligations ... supports that reform is not reasonable to expect.”

The criminal case against Torchia had been pending since before the pandemic, when a grand jury accused him of raising over $40 million in promissory note purchases from investors, marketing them as “100% asset-backed” even though he was operating at huge losses and knew that the SEC was looking into his operations.

Torchia, 64, did not testify at trial and did not return a call from the AJC after the verdict. His attorney, federal public defender Brian Mendelsohn, said Tuesday that the trial jury saw Credit Nation’s notes were 100% asset-backed, and, far from being naïve, his investors were sophisticated millionaires with their own financial advisors.

“The SEC and the United States Attorney’s Office made a slew of allegations that they were ultimately unable to prove,” the defense attorney said in an emailed statement.