Headland woman sentenced to 5 years for fraud scheme

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MONTGOMERY, AL (WSFA) - A Headland woman has been sentenced to five years incarceration for securities fraud.

District Attorney for the 20th Judicial Circuit Patrick B. Jones III and Director of the Alabama Securities Commission Joseph P. Borg announced the sentencing of Judy Kay Morehead, 61, on Tuesday. The charges stem from a scheme in which Morehead solicited and accepted over $300,000 from an act, practice, or course of business intended to defraud two victims of their investment funds.

The sentence was a result of Morehead’s plea to one count of securities fraud on Feb. 11, and remaining charges were dismissed. She is also ordered to pay a fine of $3,000, a victim’s compensation assessment of $1,000 and restitution of $250,000.

According to ASC, between February 2012 and August 2015 Morehead founded and managed a company called Southern Investment Group, Inc., based in Henry County, and through the company, Morehead advertised financial services. She had a relationship with one of the victims in the securities fraud scheme, and while acting as the victim’s financial adviser Morehead helped her create a Revocable Trust.

The trust was established to receive $250,000 left to the victim by her late sister, and which she intended to leave to charity. Morehead convinced the victim to name Morehead’s husband, Stan Morehead, as trustee and Judy Morehead named herself as the alternate trustee. Stan then moved to Florida to work, but Morehead continued to be the victim’s only contact.

Over the course of a few months, ASC says Morehead stole the $250,000 from the trust to pay Morehead’s personal mortgage loans and debts. Morehead also prepared, delivered and explained to the victim fraudulent quarterly reports as to the nature of the investments made with trust money. Morehead falsely represented to the victim that the money had been invested in arm’s length commercial transactions and never told her it had been used to pay off Morehead’s personal debts.

Two other victims also invested with Morehead and believed they were investing with her company, for the purpose of “flipping houses.” In exchange for $59,000, Southern Investment Group issued a promissory note that Morehead stated she directed her son, Ben Morehead, to sign. Rather than investing the money in real estate, as represented by Judy Morehead, the money was used by Judy Morehead to pay personal expenses. Morehead concealed her activities by paying the interest rates according to the note and ultimately repaid the note in full in accord with its terms and after the indictments were returned in this case.

The ASC cautions potential investors to thoroughly scrutinize and research any investment opportunity or offer.

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Read the original version of this article at wsfa.com.



 
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