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Durham man receives 15-20 years in prison for securities fraud

Posted August 19

— A Durham man accused of taking more than $1 million through fraudulent investments from retired teachers will spend 15 to 20 years in prison after unexpectedly pleading guilty to more than 40 charges of securities fraud, common law forgery and common law uttering.

Walter Reinhardt, 64, admitted Monday to soliciting investments from 16 victims in the Durham area between November 2005 and May 2009 for a variety of failing businesses that were owned by Bud Johnson, a Richmond, Va., man, who has since been convicted of federal fraud charges.

Reinhardt has been in jail since his arrest in 2010 and will receive credit for time served.

Reinhardt, whose trial began last week in Durham, talked his way into faculty meetings at schools and would then persuade teachers that they could earn 8 to 10 percent interest over four years if they invested with him, according to Zesley Haislip Jr., a senior enforcement attorney for the Securities Division of the North Carolina Department of the Secretary of State.

In some cases, investigators believe Reinhardt cut and pasted clients' signatures to agreements without their authorization to invest their money. In other cases, he prayed with his victims in meetings to gain their trust.

Haislip said that there are believed to be another 37 victims in North Carolina who lost an additional $2 million.

Reinhardt, an unlicensed investment adviser, received approximately $216,000 in commission between 2005 and 2009, as well as a $4,000 monthly salary, Haislip said.

The National Association of Securities Dealers barred Reinhardt in 2001 from selling securities, and the state issued a cease-and-desist order against him in 2007 for the unregistered sale of securities.

Defense attorneys, however, said their client knew he made mistakes but not to the extent the state claims. They said he didn't know what he was doing was illegal and that he thought the 2001 and 2007 actions against him were temporary.

"I regret that my actions in raising money for Bud Johnson's companies led to hardship and loss of money for my clients," Reinhardt said during his sentencing hearing Tuesday. "I sympathize with their predicament and wish that I had not been involved or had been a better steward of their assets."

Three of his 16 victims testified Tuesday morning that their dreams of retirement were dashed when Reinhardt – whom they described as kind and knowledgeable – quickly earned their trust and then lost their money.

"He put me in an investment that I did not know about, where he forged my name," said Ramona Clark, an associate professor at North Carolina A&T University in Greensboro whose family lost approximately $200,000. "That really did something to me. I lost trust. I lost faith. It's hard for me. I lost dignity. I felt stupid. Just stupid."

Clark said she had invested to prepare for retirement and wanted to put aside any potential earnings from home health care and for her grandson's college education.

Ann Breakfield, an educator in New York City who retired to Durham, said she lost more than $100,000 and is now living paycheck-to-paycheck.

"Our credit – we couldn't buy a toothpick because Walter has stolen our money," she testified. "He's slick."

State Secretary Elaine Marshall, who was in court for Tuesday's sentencing, called the cases "gut-wrenching" and said they serve as a cautionary tale about checking a broker's background before investing.

"These are people who worked hard, gave their lives to the public," Marshall said. "School teachers, college educators – they're all about making life better for somebody else, and now, we've got somebody who's destroyed their retirement."

Anyone can call the Securities Division at 800-688-4507 to find out if a broker is licensed to sell securities in the state.

"A phone call would have revealed that Mr. Reinhardt was not registered to sell securities, which should always raise a red flag with potential investors," she said.

16 Comments

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  • traynor5583 Aug 20, 11:53 a.m.

    Wow, dealers & killers don't even receive that much time...

  • ncmech Aug 19, 3:37 p.m.

    How about 1-2 years in lockup, then garnish 60% of all future earnings for restitution?

    He gets punished, some restitution is made, he pays taxes instead of being a tax burden, and saved space in the clink for violent offenders, and he continues to pay for his crimes going forward...

  • maureenmercer1 Aug 19, 3:13 p.m.

    May all his social security money go to restitution. Bud Johnson's company should have to return the money they received from the gorged documents since the monies were stolen.

  • King of Ignorance Aug 19, 2:25 p.m.

    "Haislip said that there are believed to be another 37 victims in North Carolina who lost an additional $2 million."

    Well don't be shy - either make a case or give it to the feds and let them have it.

  • scubagirl2 Aug 19, 1:54 p.m.

    Too light of a sentence? He'd be a minimum of 79 years old when he gets out. Seriously, think... View More

    — Posted by SAY 'WHAT" ONE MORE TIME!

    BUT FOR WHAT HE DID it's not long enough!!!!!

  • Save It Aug 19, 1:52 p.m.

    So, he did this for about $102K a year. He wasn't even a lucrative white collar criminal.

  • SAY 'WHAT" ONE MORE TIME! Aug 19, 1:37 p.m.

    Though he may be in prison, he will have housing, 3 meals a day, and some amenities, all taxpayer supported.

    The same cannot be said about his victims.
    ________________________________________

    Exactly, the same cannot be said about his victims. If we locked everyone up with life w/o parole that had a yaers long negative impact on others there would be no other sentence. I don't condone his actions or downplay them but 15-20 years in prison is a stiff enough punishment. Furthermore, I'd invite you to visit that housing with 3 meals and amenities and see how cushy it is. And youreally should consider getting over the taxpayer supported part of prisons. It's a fact of life. You want someone locked up for breaking the law. Who do you think's gonna pay for it?

  • smcallah Aug 19, 1:33 p.m.

    Too light of a sentence? He'd be a minimum of 79 years old when he gets out. Seriously, think... View More

    — Posted by SAY 'WHAT" ONE MORE TIME!

    The people he swindled lost their future and their past. Many, many years lost by many people... View More

    — Posted by uBnice

    Wow, he'll be living in the lap of luxury!

    I imagine his victims would want to be free to do what they want to do for the next 15 to 20 years rather than being locked in prison.

  • uBnice Aug 19, 1:21 p.m.

    Too light of a sentence? He'd be a minimum of 79 years old when he gets out. Seriously, think... View More

    — Posted by SAY 'WHAT" ONE MORE TIME!

    The people he swindled lost their future and their past. Many, many years lost by many people because of his corruption and greed.

    Though he may be in prison, he will have housing, 3 meals a day, and some amenities, all taxpayer supported.

    The same cannot be said about his victims.

  • SAY 'WHAT" ONE MORE TIME! Aug 19, 12:49 p.m.

    Too light of a sentence? He'd be a minimum of 79 years old when he gets out. Seriously, think back to something in your life that happened 15 years ago and then think of allllll that's happened since then. It may give you some perspective. Fifteen years is a very long time when you think about it

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