By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
While Turner was accumulating widows and retirees, he was also looking for other sources of money--among the naive, the uninformed, the religious. When he met Abby Abernathy, a fifth-generation rancher from Archer City, Texas, he might have felt he found all three.
In 1986, Abernathy met Turner through a longtime friend who had become acquainted with Turner at church. "It lends some credibility to him immediately, because I was born and raised in church," says Abernathy, who is Baptist. "My parents have always tried to guide me toward doing business with Christian people...I initially gave him $5,000 of my own money to see what happened. And it did very well."
Turner would open up IRA and investment accounts for his clients with Hutton, splitting commissions with the brokerage house and gaining trust by investing in marketable registered securities. Safe, guaranteed returns garnered him more credibility, particularly when trying to impress someone with Abernathy's enormous investment potential: At 26, Abernathy, admittedly naive, was poised to take over the management of his grandmother's multimillion-dollar estate.
After four good years with Hutton, Turner was unexpectedly fired. Records on file with the National Association of Securities Dealers indicate the brokerage firm severed their relationship on September 26, 1987, following allegations that Turner pocketed a $1,218 commission from a competing firm in exchange for arranging the sale of a tax shelter not approved by Hutton. For this, Turner paid a $2,500 fine to the NASD and was officially reprimanded by the oversight agency.
Turner denies he did anything wrong, claiming instead that he did not fight the allegations because he didn't have the money to hire a lawyer. It was just cheaper to pay the fine and move on.
Turner then went to work for VCG Securities, a California-based brokerage firm; his investors soon followed. Hutton had no legal obligation to notify his clients that Turner had been terminated, and he certainly didn't tell them. His stay at VCG was a brief one--only four months--but Turner had little trouble landing a spot at the New York brokerage house of Integrated Resources Equity Corporation, which sold its assets in late '89 to Royal Alliance Associates, also based in New York. Turner, along with his fellow licensed brokers, came with the sale.
Turner's first few years with Integrated Resources were quite successful--his client list was growing, as were his personal business ventures. But in 1988, he began what court pleadings would later allege was a complex scheme that enabled him to own and operate a network of companies that were essentially funded by his clients--whether they knew it or not. These were side businesses for Turner, operated separately from Royal Alliance, according to allegations in court documents, but with "its blessing." Turner would tell some of his clients that he was investing their money in legitimate, fixed-income securities, but then he would divert these funds for his own purposes--buying companies, loaning money to them, even padding his own bank account.
In 1988, Turner purchased Carl A. Johnson & Sons, Inc., a farm implements manufacturing company near Austin that was on the verge of bankruptcy. Turner "repositioned" tens of thousands of dollars of his clients' retirement and pension money to help shore up the struggling company. Bonnie Bennet and Vivian Palfi say Turner never bothered to inform them that their money was being invested in this business--much less disclose that he had a conflict of interest by investing their money in a business of which he owned part.
In 1989, Turner formed an entity named Annable Turner & Company, which was registered with the SEC as a corporate investment advisor and offered fee-based investment advice on retirement strategies. The company enabled him to extend his grasp to major corporations such as General Dynamics, which hired him to teach a seminar called "Financial Strategies for Successful Retirement." This guaranteed Turner access to hundreds of employees whom he could target from the confidential financial statements he had them fill out. If he advised them to purchase registered securities, he would then make more money from commissions generated by placing stock buys through Royal Alliance.
In 1990, Turner formed Manufacturers Acceptance Corporation (MAC), a factoring company that bought and sold the account receivables of Carl A. Johnson & Sons, Inc. Factoring companies make their profits by taking advantage of the slow cash-flow periods that plague some manufacturing companies. Instead of having to wait the usual 30 or 60 days for payment, these manufacturers opt to take a loss by selling off their receivables immediately in order to pay their expenses. The purchaser of the product instead pays the factoring company, which is essentially doing little more than floating a high-interest loan.
Turner put many of his clients into MAC, leaving some with the impression that MAC meant Municipal Assistance Corporation, a highly regarded municipal bond issued by the city of New York and traded on Wall Street.
He seemed to be taking his cues from Steve Hoffenberg, a flashy New York entrepreneur who was the darling of Wall Street in the '80s. Hoffenberg ran Towers Financial Corporation, a sophisticated bill-collection company that relied on brokers to introduce investors to the supposedly high-return venture. Towers Financial issued notes and bonds and used their proceeds to buy other companies' account receivables at a discount. The profit came when Towers collected the bills in full. It had the flavor of a factoring company, only on a grand scale.
Find everything you're looking for in your city
Find the best happy hour deals in your city
Get today's exclusive deals at savings of anywhere from 50-90%
Check out the hottest list of places and things to do around your city