News Releases
MCMURRAIN SENTENCED TO OVER 7 YEARS IN FEDERAL PRISON FOR FRAUD SCHEME
October 12, 2005
FOR IMMEDIATE RELEASE
David E. Nahmias, United States Attorney for the Northern District of Georgia, and Gregory Jones, Special Agent in Charge, Federal Bureau of Investigation, announce today that THOMAS E. McMURRAIN, 37, formerly of Atlanta, Georgia, was sentenced today by United States District Judge Willis B. Hunt, Jr., on charges of mail fraud and wire fraud related to a loan fraud scheme. According to Nahmias and the documents and information presented in court:
McMURRAIN was sentenced to 7 years, 3 months in federal prison, and was ordered to serve 5 years of supervised release. McMURRAIN was ordered to pay restitution of approximately $7.5 million.
McMURRAIN pleaded guilty to the charges on May 12, 2005.
According to the evidence, in September 1997, MCMURRAIN, a former securities dealer, formed a company called “Emergency One Cash Card, Inc.” Emergency One made two to four week loans of between $300 and $500 to low income borrowers at high interest rates of between 22% and 25% per month, using automobile titles as collateral. McMURRAIN began the business with a store front operation located at Tower Place in the Buckhead area of Atlanta. Eventually, McMURRAIN expanded Emergency One to include storefronts in Buford, Smyrna and Decatur and a holding company he called “Emergency One Holding Corporation.” McMURRAIN also created a boiler room operation, “American Call Center,” so potential customers could borrow money by phone. Over time, McMURRAIN employed 10 to 20 people to manage the storefronts and administer his operations, while McMURRAIN engaged in the process of “rainmaking,” which is soliciting investors to invest monies in his companies.
McMURRAIN promised potential investors a rate of return on their investment of between 15-36 % A.P.R. (annual percentage rate) which is much higher than what is available commercially. McMURRAIN gave prospective investors a prospectus pamphlet advising them that their funds would be used only for working capital, payday loans and general operations, and to open more storefronts. McMURRAIN told investors that the purpose of the business was to make short term loans to low income borrowers at high interest rates using automobile titles as collateral. Between 1997 and October 2000, McMURRAIN received over $9,000,000 from 87 investors.
McMURRAIN failed to tell investors that his business was operating at a loss and that the business was only able to make monthly interest payments to previous investors with funds invested by later investors. He also did not disclose that he used their investments to fund non- pay day loan businesses, including a loan of $700,000 to another McMURRAIN company, “Global E Tutor, Inc.” McMURRAIN also used investor funds to make uncollateralized loans to friends, and McMURRAIN failed to disclose to the investors that he spent $1,300,000 of their investments in day trading and on a lavish lifestyle for himself.
Despite some large investors bringing in approximately $1.5 million to McMURRAIN’s company in August and September 2000, the business failed and McMURRAIN’s business declared bankruptcy in late 2000. In the end, the vast majority of investors received only monthly interest payments totaling $1,600,000. McMURRAIN paid some investors about $200,000 in principal. The remainder never received their money back.
When the company went bankrupt, McMURRAIN and his immediate family fled to Central America. In September 2004, he was apprehended in Panama on a provisional U.S. arrest warrant. MCMURRAIN was extradited to the United States in November 2004.
This case was investigated by Special Agents of the Federal Bureau of Investigation.
Assistant United States Attorney David Leta prosecuted the case.
For further information please contact David E. Nahmias, United States Attorney or Gentry Shelnutt, through Patrick Crosby, Public Affairs Officer, U.S. Attorney's Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney's Office for the Northern District of Georgia is www.usdoj.gov/usao/gan.