For Release: July 28, 2008
U.S. Attorney Follows CFTC Civil Complaint with Filing of a Criminal Information Against George D. Hudgins of Nacogdoches, Texas for Operating a Commodities Ponzi Scheme
Hudgins Charged with Embezzlement, Wire Fraud, and Money Laundering
Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) applauds the filing by the U.S. Attorney for the Eastern District of Texas of a three-count federal criminal Information against George D. Hudgins of Nacogdoches, Texas, concerning his alleged fraud in connection with the operation of a commodity pool.
The Information charges Hudgins with one count of embezzlement under the Commodity Exchange Act, one count of wire fraud, and one count of money laundering.
According to the Information, Hudgins 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 IRS forms showing false profits. In fact, according to the Information, 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.”
The CFTC’s May 13, 2008 Civil Complaint
Previously, on May 13, 2008, the CFTC filed a four-count civil complaint against Hudgins in the Eastern District of Texas, CFTC v. George D. Hudgins, individually and dba George D. Hudgins LLC, Civ. Case No. 6:08-CV-187, charging Hudgins with defrauding investors through operation of a commodity pool that suffered losses of more than $25 million from 2005 through 2007. The complaint alleges that Hudgins fraudulently solicited the general public to participate in the 3737 Financial L.P. 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 CEA. The CFTC complaint also charged Hudgins with failing to register as a commodity pool operator (see CFTC News Release 5500-08, May 21, 2008). That same day, the CFTC also obtained a federal court order freezing Hudgins’ assets and prohibiting the destruction of documents.
Receiver Appointed to Recover Money and Tangible Items Alleged to be Part of the Scheme
On June 9, 2008, the District Court entered a Consent Order of Preliminary Injunction and Appointment of a Receiver. To date the Receiver has recovered, and placed in a segregated account, more than $19.7 million 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. The Receiver has also seized other valuable assets and is arranging to sell the assets. The Receiver has established a website to keep investors informed of the progress of the case, at www.hudginsreceivership.com.
The CFTC appreciates the efforts of the U.S. Attorney’s Office and the FBI in the Eastern District of Texas in bringing this federal criminal Information.
The CFTC staff members responsible for the ongoing civil fraud litigation against Hudgins are Kathleen Banar, Kim Bruno, James Deacon, Michael Tallarico, Michelle Bougas, Rick Glaser, and Richard Wagner.
Last Updated: July 28, 2008