Victims of alleged Mooresville Ponzi scheme speak

Phillip Willoughby isn't the type to just hand over $25,000 without doing his homework.

In 2006, Dean Martin presented him with an investment opportunity he felt carried little risk.

Willoughby had been introduced to Martin through an acquaintance, who sang Martin's praises.
Martin encouraged Willoughby to invest in Ball Products Inc., a Florida-based company that makes tennis equipment.

According to Willoughby, who had just moved to Statesville from Florida, Martin told him he planned to buy the company and then put it up for sale on the stock market.

Like Martin's other investors, Willoughby said he was assured he wouldn't lose his principal investment.
Today, Willoughby and dozens of other investors are kicking themselves for trusting Martin, who is accused of running a $10 million Ponzi scheme.

Martin, meanwhile, made bond at the Iredell County Detention Center.

The U.S. Security and Exchange Commission has filed a complaint in the U.S. District Court for the Western District of North Carolina to halt Martin, of D. Martin Enterprises Inc. and DM Ventures LLC of Mooresville, after allegations that Martin bilked investors for more than 10 years.

"I fell for it," Willoughby said during a phone interview. "For the first time in my life, I felt I could take this gamble. I almost invested more money."

In the end, Willoughby lost $17,500, plus his lawyer's fees.

According to civil lawsuits filed against Martin in Iredell County Superior Court, that's a drop in the bucket of the more than $2.4 million that plaintiffs claim Martin owes them.

The U.S. Securities and Exchange Commission said he raised more than $10 million through DM Enterprises and DM Ventures dating back to 1998.

The R&L reviewed lawsuits filed against Martin from 2007 to March 2009.

Loan amounts to Martin range from $10,000 to $600,000 for any number of years. The promissory notes on the 12-month loans guarantee big returns from D. Martin Enterprises, with interest rates ranging from 10 percent to 35 percent.

"A lot of people brought other people into it," Willoughby's wife, Patricia, said. "A lot of people were taken advantage of through reputable people. This is not something he did over a short period of time. The people who recommended us were wealthy people."

Plaintiffs interviewed by the R&L, some of whom didn't want their names used, said Martin's scheme snared several influential people in the community. However, they didn't want to name the other victims.

On the letters accompanying the promissory notes, Martin, who signs as D. Martin Enterprises president, encouraged clients to report the interest earned on the note to the Internal Revenue Service.

Among other things, the civil lawsuits accuse D. Martin Enterprises, S. Dean Martin and D.M. Ventures LLC of breach of contract, fraud and misrepresentation, unfair and deceptive trade practices, breach of fiduciary duty, sale of unregistered securities and disregard of corporate/LLC veil.

Cornelius lawyer Thomas Hanzel, who is handling at least six of the civil cases, said Ponzi schemes aren't that uncommon. There is usually one a year, he said.

Ponzi schemes like this one usually come with a promissory note that promises high interest rates to new investors.

Once other people see the high returns, they are eager to invest, Hanzel said.

An investor of the Ponzi scheme is unwittingly reliant on the person operating the business finding new investors, Hanzel said.

"As long as you recruit new investors, the Ponzi scheme stays alive," he said. "A lot of money has gone into this Ponzi scheme. As it stands right now, your investor has to seek recourse in order to recoup their investment."

Hanzel said investors should check out the investment opportunity before handing over their money. He recommends finding a licensed representative to handle your investments.

Martin's lawyer, Christopher Fialko, who is handling the criminal charges, said Martin isn't talking to the news media at this time.

Fialko said Martin's computer and his documents regarding his investors were seized as evidence.
Some of the claims in the cases have already been voluntarily dismissed.

Willoughby and Robert and Barbara Davis have confessions of judgment. The Davis family, which lives in Belmont, invested $504,603.68 with Martin, according to court records. Their judgment for breach of contract entitles them to $232,933.36.

Willoughby said he originally came to an agreement with Martin in 2008 for a payment of $3,000, plus monthly payments of $1,500. The two parties agreed that if Martin defaulted on his payments, a confession of judgment would be filed for the $27,600, plus 8 percent interest.

Martin made only five payments.

"I was one of the small players," he said. "As my wife told the news crew, 'If it sounds too good to be true, it probably is.' "

His wife said the entire situation has taken a toll on Willoughby because he feels guilty about investing with Martin. She said the guilt has made her husband's health deteriorate.

Willoughby suffers from a pre-cancerous blood condition and the stress has made his health progressively worse.

"My $25,000 is like a million to me," Patricia said. "He didn't just take our money; he took my husband's life."