It’s now up to any number of juries—civil and criminal—to untangle not only why and how Tyrone Gilliams spent $5 million of other people’s money, but also how the hell anyone ever gave him that money in the first place.
The soap opera began in November 2009, when Cincinnati businessman Dave Parlin met a gentleman named Brett M. Smith, who had a nonprofit foundation called HEARTT (Human Engineering and Research Transitional Technologies), an organization with religious overtones based in the tiny Mount Rainier-view town of Buckley, Washington.
Parlin talked to Smith about charitable investing, presumably to do good with some of the money he’d earned when he sold his ATM companies. According to Parlin’s civil complaint, it was Smith who first told him about Dr. Morf—Vassilis Morfopoulos, an acquaintance of Smith’s who worked in New York in international finance.
Parlin and Smith went to New York to meet Morfopoulos, who allegedly told them he was in the process of raising $10 million to invest in Treasury strips, which he said had a rate of return “targeted at five percent per week.” Parlin set up a family foundation with $2 million, and in early March 2010 wired that money into a JPMorgan account.
Parlin now alleges that this JPMorgan account was created strictly for this money, and that Morfopoulos had no actual experience trading Treasury strips and no direct access to them. He did, however, have financial pressures: Just a year earlier, he had finished paying off a $237,516.91 judgment to the IRS for back taxes.
According to Parlin’s complaint in May 2010, Morfopoulos told Parlin that he’d failed to raise the rest of the $10 million, but if Parlin would give his “HEARTT Fund” another $2 million, that would be enough to access the strips. So on May 12th, Parlin wired another $2 million to the HEARTT Fund. The paperwork for the transaction allegedly stated that Parlin’s family foundation would receive earnings monthly from the account, and that Morfopoulos had to invest the money himself and could not broker it to another investor. (Morfopoulous maintains this was never part of the agreement.)
Then Dave Parlin sat back and waited to hear the good news about his earnings.
Parlin’s complaint alleges that a few weeks after the HEARTT Fund account at JPMorgan received the $4 million, Morfopoulos spoke with an acquaintance in California, Laura Keller—a 49-year-old businesswoman who ran a Bay-Area-based nonprofit—about Treasury strips. Keller had heard about the amazing returns possible with Treasury strips and wanted to invest $1 million. She also said she knew someone who claimed to have access to the strips: a businessman in West Palm Beach, Florida, named J.R. Delgado, who had just started doing some business with Tyrone Gilliams.
Delgado and Gilliams were both around 40, raising small children while breadwinning in an unconventional way, putting together elaborate business deals in which they could profit from the profits. Delgado’s lawyer, G. Lynn Thorpe, says his client met Gilliams through a previous strips deal that didn’t work out. Afterward, he says, Gilliams told Delgado he could get strips himself and suggested they troll for clients together.
All of which is the best available explanation for how millions in charitable investments wound their way to Tyrone L. Gilliams Jr. and his account with Wells Fargo Advisers at One Liberty Place.
Keller apparently convinced another investor to wire $1 million to the escrow account of Gilliams’s then-attorney, Everette Scott. According to the indictment, at least three fourths of this money was misappropriated: $325,000 was transferred to the bank account of a law firm in Utah (to settle a threatened lawsuit against Gilliams), and another $395,000 was transferred to Gilliams’s personal account at Citibank; the remaining $15,000 was allegedly transferred to the business account of Scott’s law firm, at least in part at Gilliams’s instruction.
Unaware of any of this, Morfopoulos met with Gilliams in New York on July 7th. They closed the deal. Several weeks later, Dr. Morf turned over $4 million to Scott’s escrow account—without, Parlin alleges, ever telling him.
The feds say not one penny of Dave Parlin’s money was ever invested in Treasury strips. But it did pay for a lot of other stuff.
The indictment says there was $450,000 returned to a Midwestern businessman Gilliams had convinced to invest in a coal mining venture the year before. Some $510,000 was transferred to Tyrone Gilliams’s personal account at Citibank. The SEC alleges about $300,000 went to turn a property in Denver into a medical marijuana farm.
According to the SEC claim, Gilliams authorized Scott to transfer $40,000 of Parlin’s money into Scott’s law firm business account; that same day, Scott wrote a check from the account for $46,000 to Holt Motorsports, a used Porsche dealer in West Chester. The memo line reads, “Porsche 2006 911 S.”
Gilliams kept Morfopoulos and Keller at bay by sending them little bits of their own money over the next few weeks, purporting that these were the promised earnings. But Morfopoulos grew suspicious. In October, he says, he requested that all of Parlin’s money be returned immediately. Gilliams didn’t comply. But several weeks later, he did finally invest $1,620,000 of Parlin’s money—not in Treasury strips, but in a gold-mining business in Ghana.
Four days after the money went to Ghana, on Friday, November 19th, Morfopoulos again asked for the money back, and was again ignored. So he hired an attorney, Christopher Chang, a former Manhattan prosecutor, to pursue Gilliams. Parlin says he, the guy who had given Morfopoulos the $4 million, remained in the dark.
The next day, the Saturday before Thanksgiving, 600 people lined up outside State Senator Anthony Hardy Williams’s office in Southwest Philadelphia for free turkeys, paid for in part by local businessman T.L. Gilliams. This act of kindness was to promote the upcoming philanthropic Joy to the World Fest.
As a warm-up to his Philadelphia charity events, Gilliams arranged to fly friends to the Bahamas for a gala comedy night in Nassau just before Christmas. He also hired a Chester video production company, the Artist Warehouse, to start following him and his friends around to create “TLG TV,” a sort of online reality television show about his suddenly high-profile life.
Just before Joy to the World, Gilliams faced his first lawsuit concerning the money that was supposed to be earning five percent a week in Treasury strips, filed by Dr. Morf’s lawyer, Chris Chang; it demanded the $4 million back, plus another million in punitive damages. At the time, according to court filings, Morfopoulos was still telling Parlin that his money would be invested in strips any minute.
An amazing amount of Parlin’s money was spent during the next few weeks, according to the feds, not only on the Joy to the World Fest but also on the video crew that covered it like breaking news. A subsequent “All-Star Weekend” party, held at the Vault on North 2nd Street, was lavishly documented and rush-edited into “TLG TV” pieces posted on YouTube. One member of the video crew later told Reuters that he shot a sequence “where I see [Gilliams] blow $70,000 on drinks.”
Back in Cincinnati, Dave Parlin was growing more and more concerned about the nonexistent profits on his $4 million. On January 28, 2011, he demanded that Morfopoulos return the money in three business days. When that didn’t happen, Parlin hired a New York attorney, Louis Craco. Originally, Craco says, they sued Morfopoulos, but Dr. Morf’s lawyer, Chang, told them they were suing the wrong guy—that he and his client had already filed a complaint against someone in Philadelphia named Tyrone Gilliams.
Two weeks later, Parlin sued pretty much everyone involved in the entire mess. The FBI launched its own case. In the year since, everyone involved has been trying to sort out who was stung, who did the stinging, and why—and where the rest of the money went.
But the whole case may rest on one simple question, as one lawyer put it: “What is going on in Tyrone Gilliams’s brain?”
That’s what one of his college instructors, Wharton prof and sports attorney Ken Shropshire, has been wondering. “Tyrone was a nice, sincere guy who certainly projected a maturity beyond his years,” he says. He remembers going to a De La Soul concert Gilliams produced at Cheney University, and occasionally attending the Chester church where Gilliams’s dad preached. “Tyrone seemed to have a close relationship with his father,” he says, “and I just don’t know enough about what has happened here to make sense of it. But it is tragic—even just that he’s accused.”