Byung J. "BJay" Pak, U.S. attorney for the Northern District of Georgia. (Photo: John Disney/ALM)

A Georgia attorney who served as general counsel for multiple limited liability corporations owned and operated by his principal client has pleaded guilty to conspiring to defraud investors of more than $40 million, the U.S. attorney for Georgia's Northern District announced Wednesday. 

Marc Celello, a former enforcement attorney for the Georgia secretary of state's securities and business regulation division, served as vice president and general counsel of Credit Nation, which was owned and operated by Celello's client, James Torchia, according to U.S. Attorney Byung J. "BJay" Pak.

Celello pleaded guilty on Wednesday to a criminal information charging him with felony conspiracy to commit wire fraud in concert with Torchia. U.S. District Judge J.P. Boulee presided.

Celello's attorney, Nicholas Lotito of Atlanta's Davis Zipperman Kirschenbaum & Lotito, said Celello is "a talented lawyer who got caught up with someone that the government is prosecuting."

"I anticipate that Marc will help the government prosecute Torchia," he added. "It was a sad day because he is a good man."

As early as 2015, the U.S. Securities and Exchange Commission branded Credit Nation and affiliated limited liability companies owned by Torchia as a massive Ponzi scheme. Celello also advised Credit Nation Capital, Credit Nation Acceptance, American Motor Credit, Credit Nation Auto and Spaghetti Junction, according to the SEC, which sued Torchia in 2015 and Celello in 2017.

The SEC suits sought to stop Torchia and Celello from soliciting investors to buy unregistered promissory notes for subprime automobile loans and life insurance policies Torchia acquired through viatical settlements with terminally ill policyholders. According to the SEC and Pak, Torchia and Celello promised would-be investors as much as a 9% rate of return even though the Credit Nation companies were operating at a significant financial loss, and Torchia allegedly was siphoning off investment funds.

In September, a federal grand jury charged Torchia with conspiracy to commit mail and wire fraud and multiple counts of mail fraud. Torchia has pleaded not guilty.

The SEC case against Celello remains in litigation and has been referred to a special master. The SEC suit described Celello as "an active participant" in Torchia's scheme, contending that he prepared misleading offering memoranda and was "the primary interface" with sales and marketing representatives he allegedly directed to make key misrepresentations to investors.  Celello's involvement included approving newspaper ads and radio commercials, some of which were broadcast on the nationally syndicated "Rush Limbaugh Show."

Credit Nation Capital was never profitable; company promissory notes were never fully secured by hard assets and were not generating returns anywhere near the amounts promised to investors, the SEC said.

According to the SEC, hundreds of thousands of dollars in Credit Nation funds were routed through Celello's IOLTA trust account to Torchia, his wife, a restaurant he owned and an auto dealership owned by his son, according to the SEC.

Celello, 47, graduated from American University's College of Law in Washington, D.C., in 1997, four years after earning a bachelor's degree in political science at the University of Connecticut, according to his website. In Georgia, he worked as an enforcement attorney for the Georgia Secretary of State's Securities and Business Regulation Division before founding a solo law practice in 2004.