The SEC filed a federal lawsuit against Kingsport resident Mark Salyer in June citing three counts of fraud. The lawsuit was filed in U.S. District Court in Greeneville. The lawsuit claims Salyer stole approximately $6 million from MetLife customer accounts and invested the money in various real estate ventures.
Earlier this month, Salyer filed a response to the SEC lawsuit stating he is not involved in any activity governed by the federal securities laws.
“Obviously we dispute that,” said Robert Levenson, SEC attorney. “I think we set forth in the complaint what our allegations are, and we stand behind those allegations.”
According to the response, Salyer also declined to admit or deny the allegations included in the SEC complaint, citing his Fifth Amendment right against self-incrimination.
Levenson said the next step would be to proceed with the discovery phase, for which a date has not been set.
According to the complaint, the SEC claims from June 2005 until October 2007 Salyer engaged in a scheme to defraud at least 33 MetLife customers by taking approximately $6 million from their accounts and investing the money in real estate ventures he had an interest in.
SEC officials claim Salyer was involved in several business activities outside the scope of his work at MetLife, including owning two other companies — Relief Defendant Horizon Holdings and Relief Defendant Salmar Investors Group.
In 2005, Salyer signed a contract to purchase a 3,372-acre piece of property in Leeds, Ala., for $25.9 million, paying approximately $1.6 million as a down payment. The property appraised at $53 million to $63 million.
Throughout 2005 and 2006, Salyer made payments on the contract. But after exhausting his own assets of approximately $1.2 million, Salyer began tapping into customer accounts to cover the payments, the lawsuit states.
SEC officials say the primary method Salyer used to pay on this contract and other properties was to forge customer signatures on wire distribution request forms, IRA distribution request forms and variable annuity surrender forms.
The lawsuit states the money was transferred from the various customer accounts to Salyer’s companies — Horizon and Salmar — and when questioned about the transfers from the customers, Salyer would tell them the money had simply been transferred to another investment fund.
Salyer forged customer signatures on at least 26 wire request forms, thus illegally diverting approximately $3.5 million from MetLife customer accounts, the SEC alleges.
In addition, SEC officials claim Salyer also convinced MetLife customers to invest funds in Horizon under the guise that it was a MetLife investment. At least 12 MetLife customers wrote checks directly to Horizon in the amount of $2.3 million — some wrote more than one check, and many checks were for six-figure amounts.
The SEC is seeking a return of the money Salyer illegally took (along with penalties) and an injunction against Salyer prohibiting him from future violations.