Superior Court Judge Bryan Collins sentenced Walter Ray Reinhardt to 15 to 20 years in prison on Tuesday for a fraud that cost at least 16 Durham-area residents more than $1 million.
Reinhardt, 64, pleaded guilty Monday to 40 counts of securities fraud and 12 related charges in a scheme carried out between November 2005 and May 2009, according to a statement from the N.C. Secretary of State’s office.
Many of those defrauded were retired educators, whom Reinhardt persuaded to roll over their retirement funds into businesses owned by Julius Everett “Bud” Johnson of Richmond, Va. Reinhardt, according to investigators, told his victims they could earn 8 percent to 10 percent interest over four-year periods.
“Walter Reinhardt targeted teachers in his scam and took some of them for their life savings,” Secretary of State Elaine F. Marshall said in a prepared statement. “He even used their faith against several of them, praying with his victims in meetings in order to gain their trust.”
In some cases, according to Marshall’s office, Reinhardt cut and pasted clients’ signatures to agreements without their authorization in order to invest their money.
According to WTVD, in Tuesday’s court session, attended by some of his victims, Reinhardt said, “I sympathize with their predicament and wish that I had not been involved or had been a better steward of, uh, their assets.”
Reinhardt has a history of illicit securities dealings. According to the Secretary of State’s office, he did not disclose to investors that the National Association of Securities Dealers had barred him from selling securities in 2001, and that, in 2007, the N.C. Secretary of State issued Reinhardt a cease and desist order for selling unregistered securities in a Louisiana oil and gas company.
At that time, according to Secretary of State records, Reinhardt’s residence was in Hillsborough and his business office in Durham. In 2011, the Virginia State Corporation Commission issued a statement that it had fined Reinhardt and Johnson $10,000 for each of 3,743 violations of the Virginia Securities Act in defrauding Virginia investors of approximately $11.35 million. The commission gave Reinhardt’s residence as Kenner, La.
Since Nov. 17, 2010, Reinhardt’s residence has been the Durham County Jail, under a $4 million bond, reduced from an original $10 million. He was extradited to North Carolina after federal marshals arrested him in Louisiana.
In her statement, Marshall also advised anyone to check with the N.C. Securities Division before making investments. “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.”
To find out if a broker is registered to sell securities in North Carolina, call 800-688-4507.