The US Attorney for the Eastern District of Texas has laid a three-count federal criminal charge against George D.
The US Attorney for the Eastern District of Texas has laid a three-count federal criminal charge against George D. Hudgins of Nacogdoches, Texas, concerning an alleged fraud in connection with the operation of a commodity pool.
Hudgins is charged with one count of embezzlement under the Commodity Exchange Act, one count of wire fraud, and one count of money laundering. He is accused of having induced members of the public to invest or remain invested in the commodity pool through false claims regarding the purported profitability of the pool, and by preparing and delivering to numerous investors fictitious tax forms showing invented profits.
In fact, according to the charges, Hudgins was operating a Ponzi scheme whereby he ‘used investor funds to pay ‘profits’ to other investors … These payments were not actual profits, but were simply monies obtained from fellow investors.’
On May 13 this year, the Commodity Futures Trading Commission filed a four-count civil complaint in the Eastern District of Texas, charging Hudgins with defrauding investors of more than USD25m between 2005 and 2007.
The complaint alleges that Hudgins fraudulently solicited the general public to participate in the 3737 Financial commodity pool, also known as Hudgins Group and Hudg-Investments, which traded exchange-traded commodity futures and option contracts in violation of the anti-fraud provisions of the Commodity Exchange Act.
The CFTC, which also charged Hudgins with failing to register as a commodity pool operator, obtained a federal court order freezing Hudgins’ assets and prohibiting the destruction of documents.
On June 9, the District Court entered a consent order of preliminary injunction and appointment of a receiver. To date the receiver has recovered more than USD19.7m from trading accounts, bank accounts, the return of gifts made by Hudgins to his sons, the return of a deposit on a new aircraft, and other sources.