Investors Will Begin Receiving Payments in Texas Ponzi Investment Fraud
Investors who lost money in the Ponzi scheme investment fraud perpetuated by Nacogdoches, Texas businessman George Hudgins can soon begin to look forward to payments.; Hudgins pleaded guilty in September on charges of wire fraud, embezzlement and money laundering. He is yet to be sentenced.
The scheme launched in 2004, had Hudgins soliciting funds from investors for the apparent purpose of investing in stock index futures and commodities. Instead, under the scheme, potential investors were enticed with the promise of huge returns on their investment. Hudgins was in reality operating what is known as a Ponzi scheme, where investments made by investors are used to pay "profits" to other investors. By April 2008, Hudgins' scheme was incurring large losses, and in May, the federal government sued him for violations of commodities trading regulations.
Now, a court in the Eastern District of Texas has offered some reprieve to investors whose claims have not been contested. They can expect to begin receiving payments by the end of this year. However, there have been several investors whose claims have been denied because of their inability to produce evidence of their losses. Most of those who were denied their claims apparently don’t have bank records to prove their investment, having deposited their funds in the scheme, in cash. These investors are critical of the way Kelly Crawford, the receiver in the case, has denied their claims. They insist that even in the case of cash investments, a written agreement between them and Hudgins should be sufficient grounds to prove losses.
Not all claims have been denied because of lack of evidence of losses. Others have been denied because they didn’t participate in the investment scheme that Hudgins ran, although he did owe them money. Crawford's office has released a set of recommendations to investors whose claims have been denied, asking for additional information that could result in a reversal of the decision. Even those whose papers are in perfect order may not receive every cent they lost in the fraud scheme. A lot of the money invested was lost in Hudgins' trading activities, adding up to a total loss of close to $80 million dollars.
What is Ponzi Investment Fraud?
A Ponzi scheme is named for Charles Ponzi who in the early part of the 20th century defrauded thousands of people, using their investments to pay returns to other investors. Since then, this scheme has surfaced time and again, in complicated cases involving large amounts of money. Ponzi schemes tend to fall apart quickly because of the fact that promoters are required to solicit more and more investments in order to pay returns to older investors. The more number of members a Ponzi investment fraud scheme has, the quicker it comes under the scanner of regulators.
Litigating Investment Fraud
When financial losses have resulted because of falsified investment advice, investors can claim compensation from these promoters. Proving losses in a court requires a thorough understanding of complex business litigation law, and an ability to use these laws to prove your losses, and build your case. An expert business litigation attorney who has years of experience handling investment fraud cases, can bring the kind of experience your case needs. Contact a business litigation lawyer at Arnold & Itkin LLP for an evaluation of your case.
