The lead man behind an alleged $15 million Ponzi scheme that promised big returns to investors in a coal exploration company was once a NASCAR driver for the late Bobby Hamilton, and the alleged scam wasn’t the first time he’s been involved in questionable business practices.
Brian C. Rose, who raced in the Craftsman Truck Series, finished in the top five one time in 2002 and in the top 10 five times. That was his best year as a race car driver, before he was kicked out of NASCAR for using drugs.
By 2011, Rose was running his own business, Johnson City-based New Century Coal, although much of it was a front for the alleged Ponzi scheme. New Century Coal bilked $15 million from 160 investors between January 2011 and June 10 according to a federal grand jury indictment that named him and eight others as players in a detailed and intricate web of fake businesses designed to keep investors hooked.
New Century Coal claimed to be running several coal mines and putting out-of-work miners back on a payroll in Kentucky.
While there were some mining operations occurring, it was nothing like what potential investors were promised. One of those potential investors contacted the Johnson City Press about his encounter with a man named John Hankins.
It turns out — according to court documents filed in U.S. District Court in Greeneville — that Hankins is Rose. Rose apparently had his name legally changed to Hankins in an attempt to keep the investment ruse up and running longer.
The scam isn’t Brian Rose’s first. He was involved in his father’s business prior to forming New Century Coal.
The elder Rose, David G. Rose, was a longtime oil and gas company man who also involved his family in the business of scamming people.
David Rose pleaded guilty in July 2009 to one count of tax evasion and 21 fraud-related counts. He was also ordered to pay $3 million in restitution. He was released in January 2013 after serving a 52-month federal prison sentence for defrauding his investors
As a result of the federal case that sent David Rose to jail, he, his sons, Jason Rose and Brian Rose, and ex-wife, Joyce Rose, all reached agreements in a civil lawsuit filed by the Securities and Exchange Commission to repay the money taken from investors.
According to an August 2010 Associated Press story, David Rose agreed to pay $3 million, Jason Rose agreed to pay $317,000, Brian Rose agreed to pay $441,000 and Joyce Rose agreed to pay around $196,000.
The SEC claimed Rose and his co-defendants took at least $6.7 million and spent much of the money on the company’s directors and members of the Rose family, with some of the money going to home mortgages, credit card expenses and a Kentucky Derby party at Churchill Downs.
It sounds a lot like details in the federal indictment filed last week in Greeneville against Brian Rose and eight others.
Robert McGregor, a.k.a. Jim Robinson III, of Bowling Green, Kentucky; Dallas McRae, of Orlando, Florida; Hugh Sackett, of Anderson, South Carolina; James Robinson, of Perkin, Indiana; Brent Loveall, of Johnson City; Jason Smith, of Bowling Green; Ray Spears, a.k.a. Brock Hamilton, of Johnson City; and Jennifer Key, of Louisville, Kentucky, are all charged with conspiracy to commit mail and wire fraud and money laundering.
In addition, Rose as well as McGregor, McRae, Sackett, Robinson, Loveall, Spears and Key were all charged with substantive mail and/or wire fraud charges.
As of Friday, Brian Rose was being held in the Washington County Detention Center awaiting trial in U.S. District Court. He’s accused of heading up a scam that defrauded 160 investors out of $15 million.
Most of the money, according to the federal indictment, went to pay for lavish lifestyles and general living expenses for him and several employees, including Brian Rose’s affection for fast cars, thoroughbred race horses and Las Vegas gambling trips.
If convicted, the nine face a maximum term of 20 years in prison and a maximum fine of $250,000, as well as a term of supervised release of at least three years. All also face mandatory court assessments and restitution as ordered by the court.
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