Posted 11:14 pm Tuesday, July 29, 2008
UPDATE: East Texas Man Accused of Running Ponzi Scheme
NACOGDOCHES (AP) -- An East Texas man faces new criminal charges in connection with an alleged Ponzi scheme that resulted in more than $25 million in losses for duped investors, federal prosecutors said Monday.
George D. Hudgins, 57, of Nacogdoches has been charged with one count of embezzlement under the Commodity Exchange Act, one count of wire fraud and one count of money laundering, U.S. Attorney Rebecca A. Gregory said.
The criminal charges against Hudgins followed a civil complaint filed earlier this year by the Commodity Futures Trading Commission. He is accused of fraudulently soliciting investors in the 3737 Financial L.P. commodity pool, also known as Hudgins Group and Hudg-Investments.
According to Gregory's office, Hudgins recruited new investors and kept existing ones with false claims of profitability by the pool, including the use of fictitious IRS forms. Prosecutors say he used investor funds to pay profits to other investors.
"These payments were not actual profits, but were simply monies obtained from fellow investors," the criminal complaint said.
A Ponzi scheme, named after swindler Charles Ponzi, is an investment scheme that pays unusually high profits to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business.
Hudgins, who didn't return a phone call seeking comment Monday, made his first court appearance Friday before U.S. Magistrate Judge Earl S. Hines. If convicted, he faces up to 20 years in federal prison and a fine up to $250,000.
Hudgins was placed in receivership, and $19.7 million has been recovered so far from trading accounts, bank accounts, the return of gifts made by Hudgins to his sons, the return of a deposit on a new airplane and other sources.
Updated Tuesday, July 29, 2008 at 11:00 a.m. CDT
"These payments were not actual profits, but were simply monies obtained from fellow investors," the criminal complaint said.
A Ponzi scheme, named after swindler Charles Ponzi, is an investment scheme that pays unusually high profits to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business.
Hudgins, who didn't return a phone call seeking comment Monday, made his first court appearance Friday before U.S. Magistrate Judge Earl S. Hines. If convicted, he faces up to 20 years in federal prison and a fine up to $250,000.
Hudgins was placed in receivership, and $19.7 million has been recovered so far from trading accounts, bank accounts, the return of gifts made by Hudgins to his sons, the return of a deposit on a new airplane and other sources.
Updated Tuesday, July 29, 2008 at 11:00 a.m. CDT
