International Law

Commodity Pool Ponzi Scheme Alleged

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"United States Attorney Rebecca A. Gregory announced today the filing of an Information charging a 57-year-old Nacogdoches man with three counts of criminal conduct relating to his operation of a commodity trading pool in the Eastern District of Texas.

GEORGE D. HUDGINS was charged with one count of wire fraud, one count of embezzlement from investors in his commodity pool, and one count of money laundering.

According to the information in the charging instrument, beginning in 2004, through April 2008, Hudgins solicited and accepted funds from numerous investors for the purpose of investing in commodities futures and stock index futures.

To encourage investment, Hudgins provided investors with false and misleading information concerning the pool's historic returns.

The Information alleges that instead of operating at the significant profit levels stated by Hudgins, the pool lost large amounts of money.

The Information also charges that Hudgins actually used monies provided to him by investors to pay "profits" to other investors, thus executing what prosecutors describe as a Ponzi scheme.

Count II, the embezzlement charge, charges a violation of the Commodity Exchange Act.

Both Count II and Count III, the money laundering count, refer to accusations concerning what happened to the money entrusted to Hudgins by the investors.

If convicted, Hudgins faces up to 20 years in federal prison and a fine of up to $250,000.00."

Full post as published by Misleading Advertising Law on August 14, 2008 (boomark / email).