United States Attorney Anne M. Tompkins
Western District of North Carolina
TWO CHARLOTTE MEN ENGAGED IN SEPARATE PONZI SCHEMES PLEAD GUILTY TO COMMODITIES FRAUD The Defendants Falsely Promised Victims Huge Profits from Trading in the Commodities Futures Market CHARLOTTE, N.C. – Two Charlotte men charged with carrying out two separate Ponzi schemes involving trading in the commodities futures market have entered guilty pleas, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Both defendants pled guilty to one count of commodities fraud before U.S. Magistrate Judge David C. Keesler.
Joining U.S. Attorney Tompkins in making today’s announcement are Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and David S. Massey, Deputy Securities Administrator of the Securities Division of the North Carolina Department of the Secretary of State. A criminal bill of information filed on August 11, 2011, charged Mitchell Brian Huffman, 51, of Charlotte, for engaging in a $2.5 million Ponzi scheme. According to the bill of information, from 2006 through in or about March 2011, Huffman raised approximately $3.2 million dollars from approximately 30 victims by falsely claiming that he was generating annual rates of return between 100% to 150% using his proprietary trading program to trade in the commodities futures market.
Based on information in court documents and court proceedings, Huffman directed his victims to transfer their funds to his personal bank account. According to the bill of information, of the $3.2 million Huffman fraudulently obtained from his victims, he only utilized a little over 50% of the funds (approximately $1.7 million) to engage in trading activities. To conceal the fraudulent scheme, Huffman generated bogus monthly statements to his victims which falsely reflected fictitious profits from trading activities, when in fact Huffman sustained massive losses. During this time, Huffman made also Ponzi payments of approximately $834,160 to victim investors, falsely representing that these payments were profits from trading activity.
Huffman also used the victims’ funds, without their knowledge or consent, for personal expenses, including to purchase multiple vehicles, take luxurious vacations, and to make charitable contributions.
In a separate bill of information filed on August 11, 2011, Robert S. Moss, of Charlotte, was charged with one count of commodities fraud for engaging in a $1.5 million Ponzi scheme. From at least in or about 2001 through in or about February 2009, Moss solicited investments totaling approximately $3.1 million from 22 victims nationwide. Moss lured his victims by falsely claiming that he was generating substantial profits through options trading in the commodities futures market.
According to the bill of information, Moss told his victims that he had not had a losing year trading since 1993, that he generated annual returns of between 22% and 41% annually, and that none of his investors had ever lost any capital. In fact, between 2003 and 2009, Moss suffered losses of $342,264 in the commodities futures market. Moss also advised the victims that his liquid assets were more than three times the size of his trading account when in fact they were not.
According to the bill of information, filed documents and statements made during court proceedings, in exchange for their investment Moss provided his victims with promissory notes either guaranteeing annual rates of return of 16 to 18%, or a variable rate tied to the level of Moss’ trading profits. To conceal his scheme, Moss made Ponzi payments to his victims totaling $1.6 million and falsely represented that these payments were the result of successful trading profits. In addition, Moss unlawfully used money invested by the victims for personal expenditures such as mortgage payments, groceries, and other household expenses. Huffman and Moss were each charged, and pled guilty to, one count of commodities fraud. They each face a maximum of 25 years imprisonment, a $250,000 fine, or both. Sentencing dates for the defendants have not been set yet.
The bills of information filed against Huffman and Moss include a notice of forfeiture, which gives notice that the defendants must forfeit to the United States all of the property involved in the offenses charged in the information, and all property which is proceeds of such offenses. The investigation of Huffman was handled by the FBI. The investigation of Moss was handled by the FBI and the Securities Division of the N.C. Secretary of State’s office. U.S. Attorney Tompkins also acknowledges the invaluable assistance of the Commodities Futures Trading Commission in both cases.
Both cases are related to the work of Charlotte’s Securities Fraud Task Force, a group made up of the FBI, the securities division of the N.C. Secretary of State’s office, the N.C. Attorney General's Office, the IRS criminal division, the U.S. Postal Inspection Service, the Mecklenburg County District Attorney's Office, the Securities and Exchange Commission, and the U.S. Attorney’s Office. The multi-agency Task Force promotes collaboration between the agencies in the fight against corporate fraud, insider trading, accounting fraud, market manipulation schemes, and other finance-related crimes.
The prosecutions were handled by Assistant United States Attorney Mark T. Odulio, of the U.S. Attorney’s Office in Charlotte.