United States Attorney
Northern District of Texas

1100 Commerce St., 3rd Fl.
Dallas, Texas 75242-1699

Telephone (214) 659-8600
Fax (214) 767-0978

LUBBOCK MAN SENTENCED TO 10 YEARS
IN FEDERAL PRISON, WITHOUT PAROLE,
FOLLOWING MONEY LAUNDERING CONVICTION

Randall B. Morrow Defrauded Investors of More Than $4.8 Million

Richard B. Roper, United States Attorney for the Northern District of Texas, announced that Randall B. Morrow, also known as Randy Morrow, of Lubbock, Texas, was sentenced this morning by the Honorable Sam R. Cummings to 120 months imprisonment. Morrow, who had been on supervised release, was taken into custody by the United States Marshal at Judge Cummings’ direction.

In addition, Judge Cummings ordered that Morrow, age 47, pay a $100,000 fine and pay restitution in the amount of $4,813,676.

The sentence imposed was the statutory maximum and an upward departure from the United States Sentencing Guidelines. In pronouncing the sentence, Judge Cummings stated that Morrow “violated the trust of elderly and vulnerable victims” and did so based on “greed, evil venal motive,” causing physical and emotional harm to his victims.

U.S. Attorney Roper said, “I applaud the tough sentence Judge Cummings imposed today.” Roper continued, “Mr. Morrow preyed upon the elderly and vulnerable and this office will use every tool in its arsenal to protect the hard-earned savings of law abiding citizens from scam artists like this one.”

In October, Morrow pled guilty to a one-count Information which charged a violation of 18 U.S.C. § 1957(a), Engaging in Monetary Transactions Derived From Specified Unlawful Activity, or money laundering. In documents filed in Court, Morrow admitted that beginning in 1998 he devised and carried out a scheme to defraud and to obtain approximately $4,740,676.00 from approximately 27 investors under false and fraudulent pretenses.

Although not a licenced securities broker, Morrow represented himself to be a successful stock market “day trader.” Morrow admitted that he solicited and enticed individuals to invest money with him by making the following false representations and promises: that the return on investors’ money would be a 15% to 17% profit; that the return on the investments he made would allow an investor to withdraw $3-5,000 a month and still not touch the principal; that the return on an investor’s money would be 40% profit; that he was a day trader and had a system that was foolproof and at the end of each day’s trading, he would cash out and have a return of 3-5% per month; that he (Morrow) was investing his own money just like he was investing his clients; that he (Morrow) had made a 17% profit the previous month; that he (Morrow) knew how to invest when others were losing money; that the return on investors’ money would be better than a savings account; that the accounts were liquid and investors could take their money out anytime; that investors could double their money in less than a year; and, that he (Morrow) had 17 computers that watched the trend line of stocks automatically and advised him when he should move money in and out of the market.

By making these false representations and promises concerning an investment with him, Morrow was able to get at least 31 investors to invest with him. For the most part, investor funds were deposited in five bank accounts, all in Lubbock, Texas, that Morrow opened and controlled —
three accounts in the name “The Senior Principle Group,” one each at West Texas Bank, State National Bank and Lubbock National Bank and two bank accounts in the name of “Randall or Yvonne Morrow,” one at West Texas Bank and the other at State National Bank. After an investment was made, Morrow would provide, often by mail or E-mail, the investors/victims with false statements of account showing that their investments were earning interest at rates he represented.

Morrow, however, was operating a classic “Ponzi” scheme in which he fraudulently induced victims to invest based on false representations and promises and then used some investor money to pay earlier investors to make it appear as if the representations and promises were true. Contrary to the representations and promises he made, he was not a successful “day trader,” losing in his trading operation approximately $49,000.00 in 2001, $46,000.00 in 2002, $167,000.00 in 2003 and $93,436.00 in 2004.

Most of the funds deposited into the five bank accounts were used for Morrow’s benefit. Some of the monies invested were paid back to early investors with the money provided by later investors. Such payments were used to entice the investors receiving such payments to invest more money into the scheme and to entice new investors. During the operation of this “Ponzi” scheme, approximately 31 victims invested approximately $7,877,179.00, of which approximately $3,353,355.00 was paid back to some of the victims, with the defendant defrauding approximately $4,740,676.00 from approximately 27 investors.

In addition, beginning in July 2000, and continuing until July 2005, Morrow engaged in monetary transactions affecting interstate commerce in criminally derived property valued greater that $10,000 and derived from specified unlawful activity. These transactions were 63 deposits, each in excess of $10,000, of investor/victim funds in the five bank accounts in Lubbock mentioned above.

U.S. Attorney Roper praised the investigative efforts of the Internal Revenue Service - Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorney Roger L. McRoberts prosecuted the case.

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