former El paso county sheriff deputy is sentenced to 30 months in federal prison as part of ponzi scheme
DENVER – David N. Hawkins, age 46, of Colorado Springs, Colorado, was sentenced yesterday by U.S. District Court Judge Robert E. Blackburn to serve 30 months in federal prison for wire fraud and money laundering, the United States Attorney’s Office, IRS – Criminal Investigation, and the Federal Bureau of Investigation announced. Following his prison sentence, Hawkins was ordered to spend 3 years on supervised release. Judge Blackburn also ordered Hawkins to pay $204,348.91 in restitution to the three remaining victims who have not been paid yet. He was also ordered to forfeit $17,000 which the government has agreed to apply towards victim restitution. Hawkins, who appeared at the sentencing hearing free on bond, was ordered to report to a U.S. Bureau of Prisons facility by noon on a designated date.
Hawkins was originally charged by Information on January 2, 2013. He waived his right to be charged by Indictment. He pled guilty on March 15, 2013 to one count of wire fraud and one count of money laundering. He was sentenced on February 4, 2014.
According to the stipulated facts contained in the plea agreement, as well as the information, Hawkins was employed as a deputy sheriff for the El Paso County, Colorado Sheriff's Office. In 2006 Hawkins attended training courses on how to trade profitably in foreign currencies and the exchanges of foreign currencies (hereinafter, the "FOREX" or "foreign currency exchange" markets). He also attempted to self-educate himself concerning trading in the FOREX markets.
From in or about November 2009, when Hawkins obtained his first FOREX trading client, and continuing through early December 2011, he obtained in excess of $1.2 million from his colleagues at the El Paso County Sheriff’s Office, other law enforcement officers in El Paso County, and their respective friends and relatives for the purpose of trading these funds in the FOREX markets on their behalf. He had approximately 73 investors, most investors using personal savings or retirement funds accumulated over the years as their source of the investment funds. Estimated losses to investors collectively total approximately $204,349.
Hawkins made several false representations to investors, including investors would be guaranteed a return of 10% per month (or 120% per annum). These representations were false and at no time were the investments ever profitable.
Over time Hawkins removed investor funds from FOREX trading accounts into bank accounts he controlled. He would then use these funds either for his own personal expenses, for personal investments unrelated to FOREX investments, or to fund payments to those of his investors who requested to withdraw their principal investments. According to government financial analysis, over the course of the scheme, in addition to making Ponzi scheme payments to investors, Hawkins diverted approximately $175,587 for his own uses and purposes. At one point Hawkins applied investor funds toward the purchase of two personal automobiles and in mid-2011, using in excess of at least $70,000 in investor funds to purchase franchises and to set up operations for two semi-professional indoor arena football teams, one located in Danville, Illinois, and the other in Mesquite, Texas. The teams never became operational, and Hawkins was unable to recoup these funds.
“In this case, a law enforcement officer defrauded his colleagues and the public,” said U.S. Attorney John Walsh. “The sentence imposed today justly reflects the severity of that misconduct and breach of trust.”
“The FBI is committed to investigating complex white-collar crimes, especially when someone misuses a position of trust to exploit innocent investors,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “Hawkins abused his position, preyed on unknowing victims, and will now face the consequences of his actions.”
“All too often we hear of hard working Americans who lose their life savings to investment schemes; before you invest, protect yourself and seek out independent financial advice especially when a high rate of return is promised,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
This case was investigated by the Internal Revenue Service – Criminal Investigation (IRS-CI) and Federal Bureau of Investigation (FBI).
The case was prosecuted by Assistant U.S. Attorney Kenneth Harmon.