Success Trust

Background

The U.S. Securities and Exchange Commission shut down this fraudulent scheme in January 2007. On the recommendation of the SEC, U.S. District Judge Richard Story appointed Pat Huddleston and Huddleston Law Firm as Receiver to take control of the business and gather assets for eventual distribution to defrauded investors.

Huddleston Law Firm’s investigation revealed that Reynolds had been engaged in a separate mortgage elimination scam — called Success is Training — in 2005. When the principals of that scam were arrested, Reynolds created a separate scam called Success Trust and Holdings (STH). STH raised more than $5 million by promising that investors would be able to pay off their mortgages early through their investment in the scam. Reynolds also ran separate scams promising to pay off credit card, student loan and auto loan balances. 

In the mortgage scam, Reynolds represented that STH had to raise a certain dollar amount in home equity before he could generate the profits necessary to fulfilling the promises that he made. Reynolds therefore recruited many people to become “Independent Representatives” (“IRs”) of Success Trust. IRs were sales people. They solicited others to pledge their home equity to Success Trust by repeating the central misrepresentation of the Success Trust scheme. Reynolds motivated the IRs through promises of commissions and by staging sales contests in which the IR bringing in the most new investors received a cash prize.

To earn the returns necessary to fulfill the outlandish returns he promised, Reynolds “invested” the money in a series of illegal Ponzi schemes, with predictable results. As is typical in such scams, Reynolds spent more than $1 million of investor money on maintaining a luxurious personal lifestyle.

Huddleston Law Firm was able to recover enough money to pay investors a 35 percent interim distribution and is working to gather additional assets through actions against culpable third parties. The Receiver expects to be able to close the case with an additional distribution to investors.