Business: Investor sues over savings

Palm Harbor investor Horst Kayser isn't waiting for the state to tell him what happened to the $95,000 he invested in Trans Continental Airlines' savings program over the last two years.

He is suing Orlando boy band promoter Lou Pearlman and two Pinellas County sales agents for fraud and misrepresentation. He says Pearlman and Trans Continental stole his money and Churchill Financial of Clearwater and agents William Kress and Steve Rodd exploited the elderly by putting them in the program.

The suit, filed in Pinellas County Circuit Court last week, is believed to be the first investor lawsuit related to Pearlman's savings program, now under state investigation as an unregistered security. Sales of the program came to a halt in December as a review of the books began.

"I'm desperate waiting for this money," said Kayser, 69, a retired sales agent for Lufthansa Airlines. Without it, he said his obligations will force him to remortgage his house. "It's given me sleepless nights."

Many investors have been trying unsuccessfully to get their money back since last summer. Kayser asked for his money three months ago and dozens of investors have contacted the Times, saying no one at Trans Continental will talk to them about their accounts. Trans Continental said in a statement that it is cooperating with the state and that withdrawal requests "will be processed," but didn't say when.

Kayser's story is similar to those of many investors: He responded to a Churchill ad for a high-yielding bank certificate of deposit and was talked into investing in the Trans Continental "employee investment savings account" with an advertised yield of 6.08 percent.

He made his largest investment, $50,000, in September, when the program was already under investigation and investors were having trouble getting their money back. The lawsuit says Churchill agents knew about the problems but didn't tell him.

The lawsuit also says Kayser was misled that the funds were FDIC-insured and says that Pearlman intermingled investor money with Trans Continental money. Pearlman is best known as the promoter who launched *NSYNC and the Backstreet Boys.

Churchill Financial, which was one of the largest sellers of the Trans Continental savings program, denied the allegations.

"We have done nothing wrong," Rodd said. "Our names and Churchill will be vindicated. We believe that when it's all said and done, investors will get their principal and their profits back. We don't know how long that will be."

Even if an investor lawsuit is successful, it is not clear what assets will be available for recovery. Kress filed for bankruptcy in April 2005, claiming that he owned 100 percent of Churchill Financial Group Inc., which he said had no value because the startup company had no assets.

Kress said in the filing that his only assets were his Largo home, $100 in a checking account and $850 worth of household goods and other personal property.

His list of creditors included a list of people to whom he sold investments in a pay phone venture that went belly-up.

Four banks recently sued Pearlman and Trans Continental for defaulting on loans and two other lenders are trying to collect on prior judgments.

Kayser's lawsuit was filed by Clearwater lawyers Patrick Davis and Robert Persante. Other lawyers also have said they intend to file investor lawsuits.

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by bob	12/24/07 12:31 PM
steve rodd not only did a pay phone scam before Pearlman, but also sold viagtical settlemnts for American Benefit Services, Inc., another scam that sent the principles to jail for fifty years. Rodd got away to do it again and again. What's next?

by Rachel	03/05/07 08:34 AM
I just found out about this situation 3/07. I am really scared and dont know what to do. I wish someone couls tell me . I`m not in Fl. never invested before and believed like every one else that my money was secured or I would never done it.

by Lola	03/01/07 01:20 PM
Read the official complaint handed down by the Florida OFR. If Steve Rodd thinks these investors will get their money back, tell me when the spaceship will land! There is no money, nor will there ever be, unless Rodd has it buried beneath his yard.

by eck	02/08/07 03:41 PM
STEVE RODD SAYS THAT HE HAS DONE NOTHING WRONG. HE LIED ABOUT THE SAVINGS BEING INSURED BY FDIC AND ALSO THE WORTH OF LOU PEARLMANS COMPANIES. HE KNEW THAT THE REPORT THAT HE SHOWED ME FROM DUNN AND BRADSTREET WAS A FAKE. HOW CAN HE BE INNOCENT.

by M	02/08/07 11:47 AM
I don't understand why Steve Rodd is not in jail by now. This is not the first scheme he has been involved in to scam the elderly out of their savings. When will justice be served?

by Miriam	02/07/07 01:26 PM
Also taken in by Churchill. Advertised on 105.5 WDUV as a Garenteed investment at 6.08 %. When Rodd oresented the information I was told FDIC insured and backed by insurers AIG and Lloyds of London. I contributed additional funds in 5/05 & 8/05.

by bruni	02/02/07 07:22 PM
I am another trusting stupid senior that invested my life savings believing Bill Kress telling me and showing me the papers thet it was safe to do so I pray for all of us that there is a good outcome

by ange	02/02/07 06:46 PM
I was told that this investment was F.D.I.C. insured. This was back in 1999. It was also stated on the brochure along with LLOYDS of LONDON. Now I'm being told its insured by AIG and LLOYDS of LONDON. I've been trying to get a withdrawal since Aug.

by floyd	02/02/07 06:32 PM
mike milkin, enron, and trans continental. are birds of a feather. the courts should sell all of their personal and company assets to settle their debts. and give back what they took from their investors.after jail give them a tin cup and a harmonica

by bob	02/01/07 07:17 PM
It sounds like my wife and I got caught like many other senior citizens. My question is did everyone use a trust company like we did ? Our account has been called a traditional IRA. Is that how all were done ?

by JACK	01/30/07 11:40 AM
MY WIFE AND ARE IN OUR MID 70'S WE WERE TOLD MONEY WAS SAFE AS IT WAS INSURED BY F.D.I.C. WE ARE WIPED OUT IF THERE IS A PROBLEM .OVER $100,000.00 INVESTED.ANNIVERSARY DATE PASSED ON JAN 24.TRYING TO GET MONEY AT THIS TIME

by lilly	01/30/07 10:27 AM
I understand that some of the brokers were also charging a fee, claiming they could get you on medicaid if you invested in the eisa. Is that even legal? how could you afford a "planner" if you really need medicaid. ironic looks like their plan works.

by E.S.	01/29/07 03:25 PM
THERE WERE APPROXIMATELY 1500 COMPLIANTS THAT CAME IN TO THE STATE FROM THIS SWINDLE. WE SHOULD INSIST THAT THE POLICE ARREST THESE SWINDLERS AND PROSECUTE THEM FOR THEFT AND FRAUD.

by ESTIL	01/29/07 11:01 AM
AFTER CHECKING WITH MY TAX ACCOUNTANT THERE IS A POSSIBILITY THAT I CAN WRITE OFF MY LOSS OF $200,000. IT SO HAPPENS THAT I HAVE WORKED UNTIL I WAS SEVENTY FIVE TO BUILD UP A LITTLE MONEY OTHER THAN SOCIAL SECURITY. SOME PEOPLE MAY NOT BE AS LUCKY.

by ECK	01/29/07 10:56 AM
WHEN IS JUSTICE GOING TO BE DONE WITH THESE LOW DOWN BELLY WHOPPERS, NAMELY WILLIAM KRESS AND STEVE RODD OF CHURCHILL FINANCIAL. IT APPEARS THAT THEY HAVE BEEN INVOLVED WITH A SCAM BEFORE. WHY AREN'T THEY IN JAIL? STATE ATTORNEY!!!

by Donna	01/27/07 04:31 PM
My mother invested her life savings in this, and my sister also invested for a total of 200,00.In my opinion, every broker involved in selling this supposed FDIC product should see jail time, and loss of license becasue they should have known better.

by Ed	01/27/07 12:01 PM
Lets face it anyone that would do what pearlman, william kress and steve rodd did are lowdoown dogs that are taking elderly peoples money. some living entirely on social secutiry and what little interest they are getting from these small acconts.

by Eva	01/27/07 11:57 AM
This has happened to me before and was promised that i would get back my money. It never happened. The swindler got 40 years but that didnt help my financial situation.

by SAM	01/27/07 11:52 AM
Churchill financial , william kress and steve rodd are the skunks that lied to the elderly people about the accounts being insured by FDIC.

by bob	01/27/07 08:36 AM
Like others my wife and I have invested our savings in this account with assurances that it was fdic insured. We have been assured by our financial rep. that we will get our money back, but we have many reservations.

by ESTIL	01/25/07 09:47 AM
STEVE RODD ASSURED ME THAT TRAN CONTINENTAL WAS FDIC INSURED. I INVESTED $200,000. MY RETIREMENT

by Jane	01/25/07 08:04 AM
I would NEVER have invested $75,000 in a company that was not FDIC insured. My broker assured me it was, and showed me on Trans Continental letterhead that it was. I thought it was a safe investment. I hope I was not wrong. This could be devastating.