Kentucky Attorney General Files Suit Against Sellers of Fake CDs with Fake Ties to Real CU

FRANKFORT, Ky. – Attorney General Greg Stumbo here recently filed suit seeking restitution for Kentuckians who invested in phony CDs with fake ties to the legitimate Bank-Fund Staff Federal Credit Union. On March 10, Stumbo said Robert A. Halcombe of Michigan, and Dover Holland, of Alabama were named as defendants in the suit for violating the Kentucky Consumer Protection Act by representing investments as CDs with the Bank-Fund Staff FCU when the money was actually placed in one of the defendant’s bank accounts. The suit claims the defendants had no connection with the credit union. Halcombe and Holland said they were also representing the Center for Humanitarian Outreach and the Revod Foundation, according to the suit. Gloria Tressler, a security officer with the Bank-Fund Staff FCU provided an affidavit to Stumbo testifying that the defendants were not affiliated with them, said Todd Leatherman, director of consumer protection at the Kentucky Office of the Attorney General. The $1.7 billion credit union serves more than 50,000 members affiliated with the Washington-based World Bank and International Monetary Fund. Leatherman said the Center for Humanitarian Outreach in Utah also “has no connection with the defendants to our knowledge” and Revod operated as an investment club selling CDs, but no claim has been filed against the club at this time. Approximately $439,000 is owed to investors and an estimated 75% of this amount has since been frozen by a Fifth-Third Bank in Michigan, which is currently holding the assets, Stumbo said. So far, nearly 20 persons are owed and some invested as much as $100,000 in the CDs. Most of the money Halcombe and Holland collected for investments were from Kentuckians but there could be out-of-state victims, Leatherman said. “Our office began an investigation when the Clark County Attorney expressed concern after the Clark County Fiscal Court was asked to invest more than three million dollars into the certificates of deposit,” Stumbo said. Leatherman said a group of local investors thought the CDs “sounded like a good deal” and one investor made presentations to other local residents and groups including the Clark County Fiscal Court. The suit seeks, among other things, civil penalties, a temporary injunction preventing both men from removing any funds given to them for investment in a CD, a constructive trust to secure funds frozen in the Fifth-Third bank account, $2,000 for each violation and payment from the defendants for required investigation, attorney fees and court costs. Leatherman said as the investigation is still underway, no timeline was available on when the money would be returned to investors. [email protected]