DEPARTMENT OF JUSTICE

Acting United States Attorney Edward R. Ryan
Western District of North Carolina

FOR IMMEDIATE RELEASE
TUESDAY, JULY 28, 2009

CONTACT: Suellen Pierce
704.344.6222
Fax: 704.227.0264

CHARLOTTE MAN ENTERS GUILTY PLEA IN INVESTMENT FRAUD CASE CHARLOTTE, NC—Sidney S. Hanson, 61, of Charlotte, North Carolina pleaded guilty today in the Western District of North Carolina to charges of securities fraud, mail fraud, and money laundering.

The announcement was made today by Edward R. Ryan, Acting U.S. Attorney for the Western District of North Carolina, North Carolina Secretary of State Elaine F. Marshall, and Owen T. Harris, Special Agent in Charge of Federal Bureau of Investigation Operations in North Carolina. At a hearing in Charlotte before U.S. Magistrate Judge David C. Keesler, Hanson entered a plea of guilty to counts one, two and three of a federal bill of information. Count one of the information charges securities fraud, for which the maximum penalty is 20 years imprisonment and a $5 million fine. Count two charges mail fraud, for which the maximum penalty is 20 years imprisonment and a $250,000 fine. Count three charges promotion money laundering, for which the maximum penalty is 20 years imprisonment and a $500,000 fine.

“Today’s results are a major victory for North Carolina’s investing public,” North Carolina Secretary of State Elaine F. Marshall said. “From the time Secretary of State agents first searched Queen Shoals’ offices in late May to having these guilty pleas entered in Federal Court today, we wanted to achieve a result that sent a message to any other scammers out there that law enforcement in North Carolina can work quickly and in partnership,” Secretary Marshall said. “I thank the federal attorneys and the Charlotte-Mecklenburg Police Department for working with our investigators to get this result in almost record time for a securities case.”

According to the charges contained in the bill of information, Hanson was a founder and manager of Queen Shoals, LLC, and a number of related entities, all of which maintained offices in Charlotte, North Carolina. The information states that from 2000 through 2002, Hanson and others solicited individuals to invest in Apollo Trust by way of “loans,” promising extraordinary rates of returns. The Apollo Trust ultimately failed to provide the promised returns and numerous lawsuits were filed against Hanson by aggrieved investors resulting in default judgments against Hanson for hundreds of thousands of dollars. The information further states that from about 2006 through 2009, Hanson and others solicited individuals to invest in Queen Shoals and the related entities by falsely representing extraordinary rates of return with practically no risk of loss of principal by investing in Treasury bills, precious metals, and foreign currency. The information goes on to say that while a fraction of investor funds were handled as promised, the overwhelming majority of the investor funds were invested in speculative business ventures. In an effort to give the appearance to investors that Queen Shoals and the related entities were profitable, investors were sent monthly interest payments, which came, not from profits, but from new investments by other unwitting investors. The information further states that investor funds were diverted by Hanson and other family members.

The information includes a Notice of Forfeiture and Finding of Probable Cause that the defendant forfeit to the United States all of the property involved in the offenses with which he is charged, and all property traceable to such offenses, including any and all currency and monetary instruments that were received during, involved in, or used or intended to be used to facilitate the crimes alleged in the bill of information, including but not limited to the sum of approximately $33 million in proceeds and funds involved in the alleged violations. Of course, defendants in criminal cases are entitled to a presumption of innocence, and the Government has the burden of proving all charges beyond a reasonable doubt. Furthermore, any sentence received upon conviction will be influenced by the Federal Sentencing Guidelines, which the Court consults in order to determine each defendant’s actual sentence based upon a formula that takes into account the severity and characteristics of the offense and each defendant’s criminal history, if any. The ongoing investigation into this matter is being conducted by the Federal Bureau of Investigation and the Securities Division of the North Carolina Secretary of State’s Office. The case is being prosecuted by Matthew T. Martens, Assistant U.S. Attorney from the U.S. Attorney’s Office for the Western District of North Carolina at Charlotte.