$68 Million Bond Scam: Mock & Teers Face Justice

MONTGOMERY, AL – A two-week jury trial has landed two Texas men in hot water for their roles in a brazen $68 million fraud scheme targeting banks and financial institutions. Steven P. Mock, 69, of Houston, Texas, and Frank J. Teers, 50, of Montgomery, Texas, were convicted June 4, 2013, on federal charges of conspiracy, wire fraud, and bank fraud. The scheme, hatched over a decade ago, involved fabricating a massive bond portfolio to secure loans, leaving a trail of deception and financial ruin.

The operation centered around Paul Hulse, Sr., 65, of Kingwood, Texas, a director of H&H Worldwide Financial Service, Inc., and his son, Paul Hulse, Jr., who served as the company’s president. Beginning in 2003, Hulse Sr. began approaching lenders with a bold claim: he controlled a bond portfolio worth tens, even hundreds, of millions of dollars. This portfolio, he falsely asserted, could be used as collateral for substantial loans. Mock, an attorney, and Teers, a bond broker with Tri-Star Financial Services, played crucial roles in bolstering this lie, feeding prospective lenders false information to support Hulse’s claims. The truth? Hulse Sr. possessed no such bond portfolio.

The con initially failed to gain traction with larger institutions like Western National Bank of Midland, Texas, MetLife, UBS Securities, and Jefferies and Co. But in February 2005, the Hulse’s targeted the Federal Land Bank of South Alabama. Here, the deception ratcheted up. Hulse Sr. falsely represented his non-existent bond holdings and submitted doctored documents concealing his plan to use loan proceeds to *purchase* the very bonds intended as collateral. Mock compounded the fraud, falsely claiming to be Hulse’s “senior trust officer” and fabricating “trust agreements” that supposedly allowed the use of $15 million in bonds. Teers, meanwhile, provided falsified documentation confirming the non-existent bond holdings, all while knowing IRS investigators were already probing Hulse’s activities.

The Bank bit, issuing two loans totaling $68.5 million in August and December 2005. H&H promptly used over half the funds to actually *buy* the bonds – a desperate attempt to materialize the collateral they’d already promised. But the scheme didn’t stop there. A significant portion of the loan proceeds went directly into the pockets of Mock, Hulse, and their families. Teers raked in over $600,000 in commissions from the bond transactions. By 2007, the house of cards began to crumble, and the trio attempted one last deception: a letter claiming an imminent loan from Wells Fargo to repay the Bank, while conveniently omitting the fact that most of the original loan had been used to *acquire* the supposed collateral.

“Protecting the people who entrust their money in our banks, credit unions and other financial institutions is essential to a healthy economy,” stated U.S. Attorney George L. Beck, Jr.. “My office will continue work diligently to protect the people who entrust their money to these banks and credit unions. Those criminals who commit frauds and attempt to commit frauds…” Beck’s statement was cut short, but the message is clear: federal prosecutors are taking white-collar crime seriously. Paul Hulse, Jr. previously pled guilty on June 5, 2012, to conspiracy to make a false statement to a bank. Sentencing dates for Mock and Teers have not yet been announced, but they face significant prison time for their involvement in this elaborate and costly scheme.

The investigation, led by the U.S. Attorney’s Office for the Middle District of Alabama, serves as a stark reminder that even the most complex financial schemes will eventually be exposed, and those responsible will be held accountable. The Grimy Times will continue to follow this case as it unfolds.