Terry Kretz of Gallatin, Hanover's chief executive officer, and Rober Haley of Lebanon, the chief financial officer, face charges of conspiracy, securities fraud, wire fraud, mail fraud and money laundering. Kretz was charged additionally with making a false statement on a loan application.
All of the charges are felonies and stem from an investigation into the collapse of Hanover, which the government says was a Ponzi scheme in which the defendants used money from newer investors to pay off earlier investors as the investment firm failed.
The U.S. Attorney's Office said that Hanover "purported to invest in stock options, real estate, equity shares of companies, and other securities, largely through its own in-house trading room."
Kretz and Haley made "various misrepresentations about the financial condition of Hanover and how client funds would be invested," the government says. The charges contend that the defendants lulled clients into investing in the company, telling them, among other things, that Hanover "had a net worth of over $100 million," knowing that "those representations were false."
Some Hanover investors who reportedly lost money were members of Madison's Cornerstone Church, where Kretz was a member.
If convicted on all counts, Kretz could face a sentence of up to 125 years in prison, while Haley could get up to 95 years, the indictment says. The criminal investigation stemmed from disclosures about the company's operations in U.S. Bankruptcy Court.
Warrants were issued for the arrests of Kretz and Haley on Thursday, according to court records. Neither defendant could be reached for comment on Thursday.
Contact G. Chambers Williams III at 615-259-8076 or cwilliams1@tennessean.com
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