THE LEAF-CHRONICLE • October 24, 2010

http://www.theleafchronicle.com/article/20101024/NEWS01/10240329/Two-convicted-in-local-investment-scam

Following a two-week trial, a federal jury in Nashville convicted Kenneth Kennedy, 66, of Clarksville, and Ann Scarborough, 65, of Hopkinsville, Ky., this week on several charges related to their roles in a multi-million-dollar investment scam.

Kennedy, a retired military lawyer and former elected Trigg County Attorney in Cadiz, Ky., was found guilty Wednesday of three counts of wire fraud and five counts of mail fraud, according to a Justice Department news release.

Scarborough, a long-time businesswoman, was found guilty of seven counts of wire fraud and one count of money laundering. Each face up to 20 years in prison on the fraud offenses and up to 10 years on the money laundering offense.

"It is gratifying that, after a lengthy investigation and complex trial, a jury held these defendants accountable for their criminal conduct," said U.S. Attorney Jerry Martin said in the release.

At trial, the jury heard extensive evidence related to the three-year investment scam that defrauded victims in both Kentucky and Tennessee. According to the evidence, four defendants — Sheila Kennedy, her husband Kenneth Kennedy, Ann Scarborough and Philip Russell — perpetrated the scam from April 2005 to mid 2008.

Sheila Kennedy held herself out as a real estate guru who could obtain huge returns on properties to be developed. She enlisted Scarborough, a personal friend from Kentucky, and later, Russell, a financial adviser in Brentwood, to solicit investors for these projects, the release said.

Victims were told of projects involving strip malls in Las Vegas, a Disney theme park in Middle Tennessee, a medical center in Arizona and new land for the Bonnaroo music festival, among many others, the release said. In each case, investors received a "promissory note," guaranteeing their initial investment and promising them five or more times their money in just a few months.

Later, investors were assured that they would be paid from a purported billion-dollar inheritance that Sheila Kennedy was to receive from a distant relative.

District Judge William J. Haynes set Scarborough and Kenneth Kennedy's sentencing date for March 4, 2011.

Sheila Kennedy and Russell also were charged in the indictment. Sheila Kennedy previously pleaded guilty to several counts of wire fraud, mail fraud and money laundering, and her sentencing is scheduled for Nov. 12.

Russell had been scheduled to go to trial with Scarborough and Kenneth Kennedy on Oct. 5. On the first day of trial, however, Russell failed to appear, and the court issued a warrant for his arrest. To date, Russell remains a fugitive.