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How A Trans-Atlantic Investment Scam Ensnared Credit Union President Joyce Judy

17 min read

Chuck Walker was succinct if euphemistic in describing the series of cringe-inducing decisions that sent Joyce Judy, the former president of Arkansas Employees Federal Credit Union, to federal prison.

“It was a cluster mess, you know, is what it turned into,” Walker said in a deposition given in the civil suit that Judy filed in North Carolina in an attempt to recoup the money she stole and then lost in an overseas investment scam.

The case never went to trial. Instead, a federal magistrate relied on hundreds of pages of exhibits — mainly emails and depositions — to dismiss Judy’s complaint against Bob Schacht, the former race car driver who actually wired Judy’s $1 million to a London investment adviser named Emlyn Mousley.

U.S. Magistrate Judge David C. Keesler’s 38-page order, issued Dec. 17, also dismissed Schacht’s countersuit, in which he claimed Judy’s crime blew back on him and ruined his business.

“Arguably, they would not have gotten into this ‘mess’ without each other,” Keesler wrote, picking up on Walker’s description, “but they formed a partnership, proceeded together on shaky ethical ground, and then decided to invest $1 million dollars overseas as advised by Walker and/or Mousley.”

Neither Walker nor Mousley was sued, but both are now under federal indictment for unrelated but suspiciously similar activities in South Carolina.

The following story of how the president of a small credit union in Little Rock was ensnared in an international investment scam was pieced together from depositions and exhibits filed in the North Carolina civil case and from official documents filed in the criminal cases.

A Chance Encounter

Like many other stories of bad decision-making, this story starts at a bar — specifically one inside the Dallas-Fort Worth International Airport.

Joyce Judy, then in her early 50s, and Chuck Walker, almost 10 years younger, met at a restaurant inside DFW airport in October 2007. Judy was traveling with her husband, Dave. Walker and his traveling companion, Dane Freeman, were partners in Global Holdings Group, a company whose business Walker described nonspecifically as “investments” and “trading” and “rais[ing] money for an investment in Europe.”

Walker and Freeman happened to be seated next to the Judys, “and everyone just started talking and everyone exchanged [business] cards,” Walker recalled almost seven years later.

Walker, who was then living in Charlotte, was in a good mood that night.

“I love life,” he told attorney Drake Mann of Little Rock, who represented Joyce Judy in the civil case. Plus, he acknowledged, “I had a couple beers.”

After that, Joyce Judy and Walker stayed in touch — emails, phone calls, dinner when she had a layover in Charlotte.

Mainly they talked about auto racing, a sport Judy said she enjoyed and which Walker had dabbled in since he was a kid growing up in New Orleans. That’s how Walker met Bob Schacht along about 2000. They did some racing together.

At some point, Judy got the idea that Walker had worked with Carl Icahn, the legendary investor, but Walker told Mann that he had never heard the name. Walker had worked with some recognizable names, however: He had sold manufactured housing for Clayton Homes and timeshares for Spinnaker Resorts.

Judy may have been guilty of what lawyers call “puffery” in describing her business accomplishments as well. She definitely was president of Arkansas Employees Federal Credit Union, and had been since February 2006 after a 25-year career as payroll manager and credit union supervisor for Arkansas Farm Bureau Insurance.

But Walker consistently referred to her employer as a bank and seemed to think Judy might be able to invest as much as $5 million of AEFCU’s money, suggesting that he didn’t realize that the credit union had assets of only about $35 million at the time and total deposits of less than $33 million.

Neither of them had a college degree, although Walker likes to talk about his education in the School of Hard Knocks.

By the time he met Joyce Judy, Chuck Walker was calling himself an investment broker. Not because he had a securities license or anything formal like that — he didn’t. He was just the kind of guy who hooks people up for business deals. For instance, a man named Ralph invested a million in Global Holdings, Walker acknowledged, but lost it all because the instrument that Global Holdings purchased with it was fraudulent.

“It’s still on my computer to remind me what not to do again,” Walker said when he was deposed last July.

London Calling

It’s not clear exactly when an investment broker from Georgia introduced Chuck Walker to Emlyn Mousley, but it was certainly before 2009. “Every time I’ve been to London, we’ve met for dinner or something,” Walker said.

Mousley listed himself online as executive director of some kind of investment firm called Aus-Asia Global Resources Pty Ltd. of Nottingham, England, and Walker said he understood that Aus-Asia was in a joint venture with a private bank in Hong Kong.

In his deposition last summer, Walker described Mousley as “very smart” and “very honorable,” although he acknowledged that he made no effort to check up on him. And while Walker hadn’t personally done any business with Mousley, he thought the British investment wizard could help his racing buddy Bob Schacht fulfill a dream. Schacht wanted to buy the Iowa Speedway and turn it into a big-time Nascar venue.

The racetrack at Newton, Iowa, was for sale. Schacht, who was nearing 60, knew the guys who were selling it, and he had ideas for how to run it. He thought he could get former Winston Cup champion Rusty Wallace to sit on the board of directors.

The price tag isn’t clear — $7 million or $25 million or as much as $43 million, depending on which deposition you believe — but regardless of the price, Schacht didn’t have that kind of money. He was grossing $3 million or $4 million in a good year with his racing-team-for-rent business, but racing is expensive.

If they could only come up with seed money, Mousley could work some magic on it. They wouldn’t even really have to give him the money. They could just put it in an account that he could “ping” to confirm its existence and use that as collateral to begin trading.

Within weeks — a few months at most — Mousley could return many times the amount invested, and they could buy the Iowa Speedway. Maybe not free and clear — that’s one of the many murky parts — but they could at least start making payments on it.

Walker thought of his other friend, that “bank” president in Little Rock. Maybe she could help. At Walker’s invitation, Joyce Judy went to Charlotte in mid-September 2009 to meet Schacht and to discuss the purchase of the racetrack.

Judy was apparently delighted with the proposal for a couple of reasons. First, her seven-member board of directors was eager to get a better investment return than the bank CDs that had been the Arkansas Employees Federal Credit Union’s sole source of investment income. (And even those were shopped and recommended by the credit union’s accountant, Judy said.)

“I think the bank, if they would have really gotten 5 percent, would have been very happy and Joyce would have looked like a hero,” Walker said. And that was a tiny fraction of the mind-blowing returns that Emlyn Mousley had led Schacht and Walker to expect.

Second, if Schacht really did buy the Iowa Speedway, he promised to hire Judy to work “in the accounting area” at a salary in excess of $1 million a year.

No Money Down

Schacht and Walker initially asked Judy to come up with $5 million. But instead of investing it directly with Emlyn Mousley, which was definitely not allowed by the credit union’s bylaws, they drew up a “sponsorship” contract between AEFCU and Bob Schacht Motorsports Inc.

Judy’s board of directors knew nothing of this sponsorship or of a “joint venture agreement” that Judy signed on behalf of AEFCU. In fact, she thought she might be able to work it so that she would just pretend to put $5 million in an AEFCU account in Schacht’s name, and then Mousley would be able to ping that and get the deal rolling. Judy even wrote a letter falsely confirming that Schacht had $5 million on deposit at the credit union as of Oct. 5, 2009 — less than a month after the racetrack deal was first pitched to her in Charlotte.

Asked under oath about the plan to fool the British investment adviser, Schacht stumbled as he answered:

“The — see, the money that was in the — the money that was in the Arkansas [Employees] Federal Credit Union, that account there — I don’t know what the word that was used, maybe doctored up paper to make it look like there was money in an account.

“I mean, there was no money in the account. It was an account with my name on it, but she controlled the paper on it — Joyce.”

But Mousley said he couldn’t ping an account in a credit union. Judy and Schacht would need an account in a bank that did business internationally. And Judy knew she could never move $5 million — 15 percent of AEFCU’s deposits — into a deposit account at another bank. (The maximum she could legitimately invest in another institution was $250,000, although her business associates may not have realized that.)

Mousley generously lowered the price point for entering one of his “platform” investment groups to $1 million. The depositions given by Schacht, Walker and Judy don’t suggest that anyone’s expectations for the return on the investment were reduced accordingly.

In fact, neither Judy nor Schacht seemed to have a good grasp of what they were investing in.

“They were going to take the money that we sent there and pool it with other people so they could come up with more money to get on a bigger platform, is the way I understand it,” Schacht said in his deposition.

Judy and Schacht trusted Chuck Walker, and Walker vouched for Emlyn Mousley.

(Walker also provided them with a 12-page document of dense text explaining PPOPs — Private Placement Opportunity Programs — and helpfully including some warning signs for scams, including “You are asked to transfer money into an escrow account not in full control of the client.”)

Judy said she could come up with $1 million. One of the credit union’s CDs was maturing, Schacht said Judy told him, and she said she could put that million in a bank account protected by what she called an “administrative hold” that would keep it from actually being withdrawn or transferred.

Judy would later admit that there really wasn’t such a thing as an administrative hold.

Until she pleaded guilty to bank fraud almost two years later, Schacht and Walker said they believed that the $1 million that Judy deposited in a joint account with Schacht at Bank of America was the credit union’s money. In fact, Judy mortgaged her home, houseboat and cars, borrowed $225,000 from a friend and used $500,000 that belonged to a credit union customer. She told the customer — referred to as “Mr. Jones” in her deposition and never identified in court — that she would place his half-million dollars into a special no-risk, tax-free, high-yield CD.

But none of that would really matter because the money would stay in the Bank of America account as collateral for no more than six weeks, at which time the fabulous returns would begin rolling in. Everyone would be made whole — Judy, her friend, her customer, the credit union — and Schacht would be able to buy the Iowa Speedway, and Judy would have a new job paying over a million a year.

“It was just — you know, how it was all going to work, and we were all going to get rich,” Judy said in her deposition.

The Stage Is Set

In late October 2009, two years after the chance encounter at DFW and about six weeks after first hearing the pitch for a two-step deal to raise money and then buy the Iowa Speedway, Joyce Judy deposited $1 million into a Bank of America account that had been opened in North Carolina jointly in her name and that of Robert E. Schacht.

Being president of a credit union — practically a banker — Judy knew that either party to a joint account could make withdrawals, so she got Schacht to sign a document acknowledging that the $1 million had been deposited by her and AEFCU. (At that point, Judy alone knew that none of the money belonged to the credit union.) In the agreement, Schacht acknowledged that “the initial deposit is not my funds to withdraw.”

The definition of a withdrawal later became central to Judy’s civil claim against Schacht. But at the time, both Schacht and Judy apparently believed that the money would stay right there and that Emlyn Mousley would be content to merely confirm that the collateral existed. No one seemed to think there was any risk to the mysterious investment that would make them rich enough to buy the Iowa Speedway in a few months.

The money stayed in the Bank of America account for about three weeks. Then Emlyn Mousley delivered the bad news to Bob Schacht and Chuck Walker by telephone: “[T]hey could not ping this account for this particular transaction at B of A,” Walker said.

“So we said, ‘OK. So what?’

“And he said, ‘The money has to move.’

“And we said, ‘You’re freaking kidding.’”

What happened then depends on which participant is telling the story.

Walker and Schacht were sure the investment had just fallen through, and with it their dreams of the Iowa Speedway.

“There is no way Joyce is going to allow us to do that,” Walker said.

Schacht agreed. “[F]irst off, I didn’t think she would do it, and second off, I didn’t think it was a good idea either.”

But Walker, in Schacht’s presence, called Joyce Judy anyway.

“And we tell Joyce, ‘We just got a phone call from Emlyn, and he said that he could not ping the account, that the money would have to be moved.’”

Schacht said Walker explained to Judy that “the money would only have to be there for 30 days — I’m sorry, maybe it was 40 days, and on the 42nd day, the money would come back.”

“And she said, ‘OK. Go ahead and move it,” Schacht recalled.

And Walker was ecstatic: “Me and Bob looked at each other and we’re like, whoo-hoo, we’re back in business.”

Gone

There’s no dispute that Schacht wired the money out of the joint account at Bank of America to an account controlled by Emlyn Mousley on Nov. 18, 2009. But Judy insisted, in her lawsuit and in her deposition, that she never authorized the transfer. It was, she argued, a violation by Schacht of his written acknowledgement that he was not to withdraw the money.

But Schacht said he didn’t withdraw the money. He transferred it — with Judy’s approval, witnessed by Walker — to invest with Mousley as they had all agreed.

If Judy didn’t know about the wire transfer beforehand, she wasn’t in the dark for long. She couldn’t produce any evidence of what she described as “an absolute panic” when she discovered that the account had been emptied. Instead, on Nov. 20, two days after the wire transfer, she emailed Schacht and said, “Sure hope this gets there before Wednesday. We are cutting this so close!”

While the mechanics were not as the three planned, Judy, Schacht and Walker all still professed full expectation that millions of dollars would start rolling in in a matter of weeks. They all stayed in close communication.

With the end of 2009 approaching, Judy started to worry about the interest payment that her credit union customer, the unwitting donor of $500,000 to the overseas investment, would expect. She emailed Schacht and Walker, who still thought the money belonged to her employer: “I wanted to touch base and see if the Credit Union was going to have their money by next week.”

It is the first of many increasingly desperate requests for the money she had been promised, the money she owed to others, legally or illegally. No one seems to remember exactly when Walker, Schacht and Judy understood that the $1 million was gone — Mousley told Walker that the money had been stolen from him — but Walker was still delivering assurances on behalf of Mousley as late as March 2011.

“I mean, I kept hoping,” Schacht said. “Here Emlyn kept telling us, ‘I’ll fix this. I’ll make it right. Don’t worry.’ He talked to Joyce, too. ‘I’ll make sure,’ ‘I’m an honest, upstanding businessman.’ He kept saying that more than you can imagine, OK?”

In the meantime, Joyce Judy had personally paid more than $25,000 in interest to the customer whose money she stole. And in her desperation, she entered another ill-advised business relationship with a Dallas con artist named Karen Bowie, to whom she was introduced by Schacht.

Details of that adventure are sketchy, but it appears to have happened in 2010. Judy gave Bowie $100,000 to pay the attorney who was closing a Mexican bond deal. In return, Bowie “was going to take her investment and help buy the speedway and get me back the money to pay the credit union back,” Judy testified.

Judy lost her entire $100,000.

In February 2013, Bowie would be sentenced to 80 years in Texas state prison for her role in a $4.7 million Ponzi scheme called Titan Wealth Management. Titan Wealth had been shut down by the Securities & Exchange Commission in 2009, so Bowie was already under investigation by the time she scammed Joyce Judy.

Busted, Busted, Busted

Bob Schacht had no money invested with Emlyn Mousley, but the Iowa Speedway was slipping out of his grasp.

“Bob was very angry with Emlyn,” Walker said. “He actually wanted to go over there and snatch him up. And I think he wanted to report Emlyn is what he wanted to do. Now, whether he did that, I don’t know.”

Schacht said he never called the FBI, but he did talk to an agent from South Carolina. That agent had called him with some questions. Not about Emlyn Mousley, but about Chuck Walker.

Schacht couldn’t remember exactly when the FBI called, but it was during the time that Mousley was reassuring him that the money would be returned. So when the FBI asked Schacht about his dealings with Walker, his answers were the truth but not the whole truth.

“… I told them basically Chuck rents cars from me and, you know, wants to know how to drive and stuff like that. That was pretty much it,” Schacht said. He said he did not tell the FBI about Walker introducing him to Emlyn Mousley or the $1 million investment.

Judy apparently thought that Schacht had considerably more contact with the FBI than that 10-minute conversation, but she knew that he hadn’t “ratted her out,” in the words of Schacht’s attorney. Judy knew that her crime, the theft of $500,000 from a credit union customer, was detected by a routine audit in April 2011.

The following August, Judy waived her right to be indicted by a federal grand jury and pleaded guilty to bank fraud. Schacht said he didn’t know anything about Judy’s legal problems until a reporter from Arkansas Business called.

Judy was ordered to pay restitution to the credit union’s bonding company, which had made “Mr. Jones” whole, and sentenced to 26 months in federal prison, but she didn’t report until the spring of 2012. In the meantime, she hired Drake Mann to sue Schacht, who had wired her money overseas, but not Mousley or the man who was the hub of the circle: Chuck Walker. She didn’t have written contracts with them.

Judy spent most of 2012 and 2013 in prison. After her release, when she returned home to North Little Rock and began working for Eagle Construction & Utilities LLC in Benton, the civil case that had languished in federal court in North Carolina heated back up.

By the time Schacht was deposed by Mann in January 2014, Emlyn Mousley had been indicted on three counts of wire fraud in South Carolina, where the FBI has made a cottage industry of nabbing the perpetrators of “high-yield investment program” fraud.

According to an affidavit filed by Special Agent Byron W. Thompson, Emlyn Mousley was arrested because he fell for an FBI sting.

According to Thompson’s affidavit, an informant posing as a potential investor met with Mousley in Phoenix in September 2013. Arizona FBI agents warned Mousley that his investment pitch was being investigated as a fraud.

Mousley then met with the informant in South Carolina and, with the FBI listening, offered him a different investment with a guaranteed return of between 80 and 100 percent.

Mousley was scheduled to appear in court in South Carolina last week, but his lawyer, Frank Eppes of Greenville, asked that he be excused. It seems the last time Mousley tried to come to court about six months ago, “he was taken into custody and not allowed to enter the United States.” That cost him approximately $3,000, according to Eppes’ motion.

“Defendant currently has limited resources to effectuate a return in January,” Eppes told the court, but his client does intend to appear for trial, whenever that is scheduled.

By the time Chuck Walker was deposed in Judy’s civil case last July, he too had been indicted in South Carolina for an international investment scam. Neither Judy’s attorney, Mann, nor Schacht’s attorney, William Morgan, realized it when they spent five hours questioning him at Morgan’s office in Hickory, North Carolina, and he certainly didn’t volunteer that information.

Walker was charged in June — along with Dane Freeman, the friend he had with him at DFW, and a South Carolina lawyer named Michael Mark McAdams — with three counts of wire fraud and one count each of wire fraud conspiracy and international money laundering.

According to the grand jury indictment, Walker, McAdams and Freeman, as partners in Global Holdings Group, “sought and solicited funds from wealthy individuals for a high-yield, unregulated, transnational investment opportunity.”

But instead of investing the money they received, the three “used the solicited funds to pay personal expenses and to make lulling payments to previous investors.”

The charges against Walker, McAdams and Freeman don’t appear to involve Emlyn Mousley or Walker’s deal with Bob Schacht and Joyce Judy. Instead, according to federal prosecutors, the Global Holdings scam concluded at the end of July 2009, about six weeks before Walker and Schacht invited Judy to Charlotte to pitch the Iowa Speedway idea.

The criminal charge itemizes three wire transfers into South Carolina totaling $420,000, but prosecutors also want Walker, McAdams and Freeman to disgorge all of Global Holdings’ ill-gotten gains, a total they estimate to be at least $3.5 million.

Walker has pleaded not guilty and is tentatively set for trial in April. His criminal defense attorney, Rose Mary Parham of Florence, South Carolina, said she didn’t want him giving any interviews.

Of the four main players in the investment — Joyce Judy, Chuck Walker, Bob Schacht and Emlyn Mousley — only Bob Schacht, the racecar owner who wanted to run a racetrack, has avoided a criminal indictment.

“He was a patsy if you think of a patsy as someone who doesn’t know what’s being done to them,” Schacht’s lawyer, Bill Morgan, told Arkansas Business.

As for the investment opportunity that his client jumped into, Morgan had this to say:

“It’s a prime example of ‘If it seems too good to be true, it probably is.’ And to get some [professional] advice. There are probably a lot of lessons to be learned.”

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