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The Texas Department of Insurance is investigating whether a Houston businessman and his companies defrauded elderly investors of millions of dollars over the past decade.
Leon “Randy” Sinclair III, 57, and his corporations — the for-profit National Estate Planning Inc. and the nonprofit Golden Legacy Inc. — are being sued by Mary Christine “Tina” Smith, a 73-year-old Houston widow who alleges Sinclair defrauded her of more than a half-million dollars by claiming to invest the money in annuities.
Both corporations are now in receivership, placed under the control of a third party answering to a civil district court.
The investigation indicates investors as a whole may have been defrauded of $10 million to $20 million, said sources close to the case. No criminal charges have been filed.
Sinclair’s lawyer concedes that while poor business decisions may have been made, Sinclair and the companies did not engage in any criminal wrongdoing.
“The businesses made some very poor business investments, but nothing illegal or immoral has been done,” said attorney Carl Dawson. “I think that’s hopefully what will come to light.”
Smith, who invested $560,000 with Sinclair when he approached her shortly after her 79-year-old husband’s death in December 2007, is hoping to recover some, if not all, of her money through the suit, her lawyer said. About $10,000 of her money has been returned. That occurred when she confronted Sinclair after receiving no account statements or documents confirming purchase of the annuities, the suit states.
“It’s been a terrible experience for her,” said Smith’s attorney, Lewis Jost. “She and her husband thought they had saved up enough money to have a safe and comfortable retirement. That money has been taken away.”
The Texas Department of Insurance is investigating, said Sgt. Cary DeCuir of the agency’s fraud section, but he declined to comment further Wednesday. The Harris County District Attorney’s Consumer Protection Division could not comment whether it is also investigating, said division chief Markay Stroud.
Attempts to reach Sinclair for comment Wednesday night were unsuccessful.
Tax consultant James Robert “J.R.” Coleman of Spring said he worked for Sinclair and one of his national companies from 2003 to 2005 and first became suspicious, then disgusted, with what he saw before he quit. Coleman sent a written complaint to the Texas Attorney General’s Office in February 2006 about Sinclair’s and Golden Legacy’s activities, but he said nothing was done. Coleman said he also made a verbal complaint to the IRS’ criminal investigations division.
Elderly clients would purchase charitable gift annuities, thinking they were helping charities while investing their money, but no one was benefitting except for Sinclair and his companies, Coleman said.
“His victims were all old people in their 60s, 70s, 80s and 90s,” Coleman said. “The whole pitch for Golden Legacy was they could manage your money better than you could, so if you wanted to give money to charity, you could make this donation, have a nice tax deduction, get a lifetime income, have your heirs get an income, then the charity of your choice would get the money upon your death, and the money would grow because of their good investment management.
“So here you’ve got old folks that are thinking, ‘Gee, not only am I going to get money, but I’m going to do good, I’m going to help people.’ And nobody was being helped except Randy ... and the people that worked for Randy by the fact that they had jobs,” Coleman said.
“The thing that I'm mad about the most and what infuriates me is nobody bothered to look into it ... If the attorney general's (office) would have looked into this back in 2006, there would have been a lot of elderly people who might not have been victimized. Millions more wouldn't have been stolen.”
After a preliminary search, the AG’s office could not find a record of receiving the letter, said agency spokesman Jerry Strickland. He also said the former employee it was addressed to has no recollection of the issue.
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