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Economist accused of fraud
(Post and Courier, The (Charleston, SC) (KRT) Via Thomson Dialog NewsEdge) Apr. 6--Al Parish, a prominent economics professor at Charleston Southern University and a flamboyant fixture in the local business community, was accused Thursday of securities fraud by the federal government, which said perhaps tens of millions of dollars are missing.
Parish and his Parish Economics LLC, a company owned by Parish and his wife that has invested on behalf of an estimated 300 individuals and companies, were sued for five counts of civil fraud by the Securities and Exchange Commission.
Earlier this year, his company claimed to have $134 million in assets, but federal investigators said Parish, who now claims to have lost his memory, sent statements to his clients over the past two years that 'grossly misrepresented' returns and how much money was left in the fund 'pools' that they had bought into.
'Essentially the complaint says there's a lot of missing money," said Alex Rue, an SEC lawyer handling the case.
CSU also filed suit against Parish, his wife and his companies Thursday, claiming that they lost $10 million of college funds.
Parish, 49, checked into a hospital last week, saying he had amnesia, according to acquaintances, the university and the SEC. Officials at CSU, where Parish has taught since 1990, said he remained at Medical University of South Carolina hospital Thursday. MUSC would neither confirm nor deny that Parish was a patient.
Parish and his wife, Yolanda Yoder Parish, did not respond to telephone calls and e-mails Thursday.
A federal judge in Charleston froze the assets of Parish and his companies Thursday, at the request of the SEC. U.S. District Judge David C. Norton also appointed an Atlanta-based financial consultant to seize business records, insurance policies, keys, computers and passwords from the economist and his employees.
CSU asked that authorities also seize Parish's hard assets, including watches, jewelry and safe-deposit boxes.
The South Carolina Attorney General's office is also looking into Parish's dealings, after fielding a call from one of his investors.
Parish, a College of Charleston graduate, started investing other peoples' money in 1986, about a year before he earned his doctorate in economics from the University of North Carolina at Chapel Hill. He acquired a reputation as a shrewd and creative money manager, and a number of individuals contributed to the fund 'pools' that his firm offered.
Parish's picks returned between 32 percent and 42 percent a year, according to his company's figures. Some $51 million, or 38 percent of the investments, were in hard assets, including jewelry and artwork.
The high-flying funds drew the scrutiny of the SEC in February, and investigators found that the statements Parish sent to clients and would-be investors did not match up with the amounts in his brokerage accounts, according to the SEC suit.
For example, Parish provided federal examiners statements for two funds with a listed value of $29 million, but the brokerage firms that handled those accounts said they collectively held less than $100,000, according to SEC filings. In some cases, Parish Economics listed millions of dollars in nonexistent brokerage accounts.
The SEC said Parish overstated his company's holdings by at least $75 million in a bid to 'lure in new investors and lull current investors.'
Last week, while investigators tried to question Parish about the discrepancies, he checked into a local hospital, saying he had amnesia. On Monday, his wife, who held his power of attorney, allegedly instructed an employee to transfer remaining funds to family members in quantities small enough to avoid government financial reporting requirements, according to court documents. The SEC said that the assistant declined to move the money and was fired.
Investigators estimated that 300 businesses and companies had put money in Parish's investment pools, though they were still looking for a complete list of investors Thursday.
The allegations filed Thursday began to reverberate deeply in the Charleston business community, where Parish cut a large and flashy profile. The local whiz kid, born and raised in Hollywood, S.C., was seldom absent from a crowd of suits in Charleston, where his own flamboyant wardrobe stood out. Parish parceled out investing tips at various speaking events, gave regular economic forecasts for the Charleston Area Metro Chamber of Commerce and wrote columns for The Post and Courier.
In a lawsuit filed Thursday, CSU said it gave Parish $10 million to invest over the past five years, relying on its star economist's 'oral representation and alleged expertise.'
To date, Parish 'nor anyone from his office has offered an explanation as to the whereabouts of plaintiffs investment funds," the university's attorney wrote.
The Charleston Digital Corridor Foundation, a private group set up by the city of Charleston to help fund startup technology businesses, had most of its holdings in Parish Economics. Ernest Andrade, the city employee who oversees the foundation, said the online account still showed a sizable balance Thursday morning when he heard about the SEC investigation. Andrade said Parish's companies regularly sent out balance statements, but never provided a detailed prospectus of where the funds were being invested.
'This certainly isn't good," he said.
Parish was a co-owner and vice president of Mount Pleasant-based Battery Wealth Management, according to the SEC. Wayne Cassaday, president of the company, said Parish no longer owned an interest in his business and that he had no knowledge of alleged wrong-doings by Parish, and distanced himself from the economist Thursday. Some of Parish's investments were as atypical and lavish as his suits, including a collection of diamond-studded pens that he claimed would appreciate much faster than most stocks. He also owned a temporary staffing firm, an economic research company and a clothing store.
In a January column in The Post and Courier, Parish wrote: 'Any investor needs to answer three questions before making an investment: Can I afford to make this investment? Can I afford not to make this investment? Can I sleep at night with my decision?'
He was ordered to appear in federal court in Charleston on April 13.
By Kyle Stock and Schuyler Kropf
Michael Buettner, Doug Pardue, John P. McDermott and Katy Stech contributed to this report.
ANYONE WHO BELIEVES that they have lost money to Al Parish's alleged fraud, please contact Doug Pardue of The Post and Courier. You can reach him by phone at 843 937-5558 or via e-mail at dpardue@postandcourier.com.
WHO IS HE? Born outside of Charleston, Al Parish began his investment business as a sideline in the mid-1980s and later became a sought-after speaker and economic forecaster. Along the way he also developed a taste for outlandish outfits and expensive pens.
TIMELINE:
--Feb. 22: A staff accountant with the Securities and Exchange Commission examines the records of investment firm Battery Wealth Management in Mount Pleasant. The examiner noticed that 29 of the firm's clients were invested in four asset pools managed by Parish Economics LLC, which is owned and operated by Charleston Southern University professor Al Parish. A balance sheet of Parish Economics provided to the SEC showed the four pools had assets of more than $134 million.
--March 21: At the SEC's request, Parish provides a brokerage account statement from TD Ameritrade for one of his investment pools. TD Ameritrade later told investigators that the statement did not reflect an active account with the firm and "appeared to have been falsified.
--March 29: Parish presents his annual economic forecast before 700 business representatives at the Charleston Area Convention Center. According to acquaintances who have spoken with his family, Parish reported feeling dizzy and complained of blurred vision while teaching later that day at Charleston Southern University. He was taken to Trident Medical Center.
The SEC said Parish said he has lost his memory.
--April 5: The SEC filed a lawsuit in federal court in Charleston alleging securities fraud, naming Parish, Parish Economics LLC and another Parish- controlled entity, Summerville Hard Assets LLC. The agency said virtually all the assets in the four investment pools "have been dissipated."
AMNESIA: After economist Al Parish was contacted by authorities regarding the investment funds he runs, he checked into a local hospital, saying he has amnesia, according to a court document filed Thursday.
Though the claim may sound suspicious, stress-induced memory blackouts are a welldocumented medical condition that prevent people from recalling upsetting events, said Alberto Goldwaser, a professor at New York University and a clinical and forensic psychiatrist.
The condition, sometimes called dissociative amnesia, is usually triggered by a traumatic experience, Goldwaser said.
Therapists can try to coax the memories out of a patient, and memories can also resurface over time. When cases involve lawsuits, they rely on previously collected evidence, Goldwaser said.
PARISH'S 'POOLS': Parish Economics LLC offers investments via four "pools," each of which invests in a different type of asset: Hedged Income Pool: According to information provided by Parish Economics to a Security and Exchange Commission examiner, this pool aims to "produce above-average income with limited investment risk to the investor."
The pool invests in government and high-grade corporate bonds, according to information provided to the SEC. "The fund held approximately $19,784,000 on 12/31/2006," according to statements provided to the SEC.
STOCK POOL: As described to the SEC examiner, the stock pool "is an informal pool of capital with which members may potentially earn capital gains on the purchase and sale of stocks. The goal is to generate profits through aggressive trading of stocks with growth potential; dividends from trades are insignificant. ... The account is held under the name of Albert E. Parish Jr. of Parish Economics LLC to facilitate transactions. ...The fund held approximately $12,645,000 on 12/31/2006."
FUTURES POOL: The purpose of this pool, according to information provided to the SEC, is " to permit those wishing to speculate in futures and options the opportunity to do so with relatively small sums of capital. Transactions within the pool are based on a proprietary mathematical model developed by Dr. Parish in the mid-1980s. ... The fund held approximately $50,492,000 on 12/31/2006."
HARD ASSETS POOL: As described to the SEC, this pool's goal "is to generate a profit on each trade of at least 25 percent with an annual return of at least 40 percent. ...Assets in which the pool invests currently include high-end Swiss watches, gemstones, jewelry and art. ... The fund held approximately $51,314,000 on 12/31/2006."
To see more of The Post and Courier, or to subscribe to the newspaper, go to http://www.charleston.net.
Copyright (c) 2007, The Post and Courier, Charleston, S.C.
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