Myrtle Beach lawyer accused of Ponzi scheme

The Securities and Exchange Commission issued charges Thursday against a Myrtle Beach lawyer accused of defrauding dozens of investors of $3.5 million in a high-yield Ponzi scheme.

The SEC accuses M. Mark McAdams of working with former investment broker R. Dane Freeman of Flatrock, N.C., to attract investors on false promises of fast and high returns on investments in bonds and notes, according to a complaint filed in a federal district court in Columbia. The pair, acting as Global Holdings LLC, never purchased a bond or generated funds on behalf of investors. Certain investors were paid with funds raised from new investors, making the fraud a Ponzi scheme, said Graham Loomis, assistant director of the commission's regional office in Atlanta.

McAdams and Freeman could not be reached for comment late Thursday.

McAdams and Freeman founded Global Holdings in fall 2007 and raised $3.5 million in the first nine months of 2008. To Loomis' knowledge, the about 35 investors lived in South Carolina, he said. By October 2008, McAdams and Freeman had dissolved the company.

The filing accuses McAdams of using his position at the McNair law firm without the firm's knowledge to communicate with investors and conduct business for Global Holdings. McAdams resigned in 2008 reportedly as a result of activities connected to Global Holdings. McAdams then began his own law firm.

McNair representatives could not be reached for comment, although firm employee Jennifer Benton confirmed that McAdams resigned in 2008.

Freeman worked for several brokers and investment advisers until 2005.

Among Global Holding's claims, the company said an investment of $20,000 could yield $1 million in 6 months. The complaint gave a list of instances in which McAdams and Freeman misled investors breaking multiple federal security laws. The company claimed to have executed hundreds of transfers and earned hundreds of millions of dollars for investors.

Several agreements with investors said Global Holdings would transfer the money to a German entity to be traded. Although the company claimed it would send $2.1 million, bank records show only $1.3 million was transferred.

Freeman allegedly funneled money to family, a colleague's girlfriend, his personal debts and "other investors," according to the complaint.

The securities division of the S.C. attorney general's office first began investigating McAdams and Freeman before involving the SEC. Both entities filed complaints in court.

The two men will be served with the complaint and be allowed to respond before litigation proceeds, Loomis said. The SEC will only pursue civil litigation as it is allowed under law, and the U.S. attorney will be left to decide whether to pursue criminal proceedings, he said.

"He would not face jail time, it would just be a monetary penalty," Loomis said. "The goal of the litigation would be to get money turned back to investors."

If they are convicted, a judge would have wide discretion in determining a penalty, he said.