News and Press Releases

Two Charlotte Men Sentenced To Prison For Operating Separate Ponzi Schemes

FOR IMMEDIATE RELEASE
January 18, 2013

United States Attorney Anne M. Tompkins Western District of North Carolina

The Defendants Falsely Promised Victims Huge Profits From Trading In The Commodities Futures Market

CHARLOTTE, N.C. – Two Charlotte men were sentenced late Thursday, January 17, 2013, for carrying out two separate Ponzi schemes involving trading in the commodities futures market, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Joining U.S. Attorney Tompkins in making today’s announcement are Roger A. Coe, Acting Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and North Carolina Secretary of State Elaine F. Marshall.

Mitchell Huffman

Mitchell Brian Huffman, 52, of Charlotte, was sentenced by Chief U.S. District Court Judge Robert J. Conrad, Jr. to serve 60 months in prison, followed by three years of supervised release. Huffman was also ordered to pay restitution to his victims, the final amount of which will be determined by the Court within 60 days. During the sentencing hearing, Judge Conrad also ordered the defendant to forfeit approximately $2.5 million the Court deemed as proceeds of Huffman’s criminal conduct.

In September 2011, Huffman pleaded guilty to engaging in a $2.5 million Ponzi scheme. According to filed court documents and court proceedings, from 2006 through in or about March 2011, Huffman raised approximately $3.2 million dollars from his 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. Court records show that 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.

At the sentencing hearing, Judge Conrad said that Huffman took away “retirements, college educations funds and houses” from his victims and caused them to go through “financial hardships and depression.”

Robert Moss

Robert S. Moss, 49, also of Charlotte, was sentenced to 57 months in prison followed by three years of supervised release, and was ordered to pay $1,460,121 as restitution. Moss pleaded guilty in September 2011 to 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 victims nationwide. Court records show that Moss lured his victims by falsely claiming that he was generating substantial profits through options trading in the commodities futures market. Filed documents indicate that 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 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.

Both Huffman and Moss have been ordered to self-report to the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.

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 and Financial Crimes 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.



 

 

 

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