LUFKIN, TX (KTRE) - George D. Hudgins is accustomed to risking millions of dollars on U.S. Commodities. What he's not used to is gambling on three counts of criminal conduct that could put him in a federal prison for up to 20 years. U.S. Attorney Malcolm Bales listed the charges. " The first count being wire fraud. The second count being embezzlement from a commodity trading pool, which Mr Hudgins operated, and the third count is a money laundering count. This is shorthand for spending proceeds that he earned as course and a product of his wire fraud activities."
The 57 year old businessman is pleading not guilty. Jury selection for Hudgins case is scheduled for November 15. The prosecutor is anticipating a plea agreement will soon be reached. Court documents allege too many specifics.
Investigators describe a Ponzi scheme, also known as a pyramid scheme. Call it what you want. The result is the same. " What he was doing was paying any profits that were allegedly earned by his investment company were simply their investments made by other victims in this case and so there are no real profits and it is an allusion that is based on, sort of, money moving from left to right where nobody really knows the source of the fund, except the individual running the scheme, " explained Bales. 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.
The U.S. Attorney is working closely with attorneys from the Commodity Futures Trading commission. Attempts are being made to collect on Hudgins' assets that range from homes to shoes. Last report showed $21.5 in possessions and holdings. Both civil and criminal attorneys say there's no real way of knowing how much money investors will get back. They will speculate on one thing though, it won't be 100%. Bales said, " The truth though will be there will be some losses and of course Mr Hudgins should be punished because of that. "
Hudgins and his attorney, Chuck Meadows declined requests for an interview.
Hudgins is out on bond under a list of restrictions including the strict order to avoid all investors. They are now witnesses in the case. Intimidating them is a gamble Hudgins can no longer afford.
*Hudgins waived his right of a Federal Grand Jury indictment
*Agreed to appear after filing of an Information and summons
Wire fraud: Punishment is 20 years in federal prison, $250,000 fine or both, supervisory release up to 3 years
Embezzlement: Punishment is 5 years in federal prison, $250,000 fine or both, supervisory release up to 3 years
Money laundering: Punishment is 10 years in federal prison, $250,000 fine or both, supervisory release up to 3 years.
*If convicted could be ordered to make restitution
*Hudgins currently being treated for depression and on medication, but doesn't interfere with his competency
*Released under $50,000 unsecured bond
*Conditions of release: Don't commit any additional crimes, immediatly and in writing notify court of a move or change of phone number, appear when required, promise to appear for trial and if convicted to voluntarily surrender, agree to be pre trial supervision, maintain or actively seek employment, surrender passport, don't acquire passport, travel restricted to Eastern District of Texas and Dallas County ( where attorney is located ), any travels outside those boundaries requires prior permission from court, undergo medical or psychiatric treatment if determined necessary, don't use firearms, report to court any contact you have with law enforcement office at any level, including traffic stops, notify any prospective employer of circumstances.