Retired Pharmaceutical Sales Rep Pleads Guilty to ‘Ponzi’ Fraud Scheme
Springfield, Ill. – A Springfield man, James U. Dodge, 72, admitted this morning that he operated a ‘Ponzi’ fraud scheme that defrauded more than 50 victims over a period of six years beginning in 2004. Dodge, of the 4800 block of Johanne Court, pled guilty to one count each of mail fraud and money laundering before U.S. Magistrate Judge Byron G. Cudmore. Sentencing is scheduled on Jan. 13, 2011, before U.S. District Judge Richard Mills.
According to court documents and during today’s court appearance, from at least June 2004 through April 2010, Dodge admitted that he defrauded more than 50 investors of $1,000,000 to $2,500,000. Dodge admitted that he made false statements and submitted fraudulent information to obtain money from individuals in the guise of ‘financial investments.’ Dodge represented to investors that he used an “algorithm” to trade on the stock market, a system that he represented guaranteed him at least a 6% return or profit per month. Dodge further represented that he would split this profit with investors and they would receive payments of 3% of their investment each month, for a total 36% return per year. Some investors opted to receive this ‘return’ monthly in the form of a check while others opted to roll over their investment ‘return.’ Dodge sent investors either their check or a handwritten monthly statement.
Dodge admitted that he did some investing and trading through three different brokerage accounts; however, he actually lost a significant amount of the money. In fact, Dodge transferred only 22% of the money he collected into these investment accounts. Dodge admitted that the rest of the investor monies was used to pay other investors their monthly 3% ‘return’ and for his personal purchases and expenses.
Dodge admitted that after Sept 1, 2009, he collected at least $358,000 from investors and did not attempt to use any portion of it for market or futures trading. Despite the fact that federal agents executed a search warrant at his home in February 2010, Dodge admitted that he continued to falsely represent that his ‘method’ could generate great profits and that he collected an additional $112,900 from investors in March and April 2010.
On April 28, 2010, Dodge was arrested and charged in a criminal complaint. He was released from federal law enforcement custody with conditions, including that he have no contact with ‘investors.’ A grand jury returned its indictment of Dodge in May.
According to court documents, Dodge is a retired pharmaceutical sales representative and is not registered as a broker or as an investment advisor with the Illinois Secretary of State, Illinois Securities Department.
Agencies conducting the investigation include the Internal Revenue Service - Criminal Investigation; Illinois Securities Department, Illinois Secretary of State’s Office; the Federal Bureau of Investigation; and the U.S. Postal Inspection Service. The case is being prosecuted by Assistant U.S. Attorney Patrick D. Hansen.
The offenses of mail fraud and money laundering each carry a maximum statutory penalty of 20 years in prison. The defendant may also be ordered to pay restitution to victims of the offenses.
James A. Lewis
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