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Harrisonburg Man Pleads Guilty To Fraud Charges

Paul Souder Admits to Mail, Wire Fraud Charges

FOR IMMEDIATE RELEASE

April 17, 2014

HARRISONBURG, VIRGINIA – A Harrisonburg man, who admitted today to bilking nearly 20 investors out of more than $1 million dollars through a fraudulent investment scheme, pled guilty yesterday in the United States District Court for the Western District of Virginia in Harrisonburg to related fraud charges.

Paul Souder, 60, of Harrisonburg, Va., waived his right to be indicted and pled guilty this morning to one count of mail fraud and one count of wire fraud.

“Mr. Souder abused the trust of his clients when he stole their hard-earned assets,” United States Attorney Timothy J. Heaphy said today. “Instead of investing their money, he paid his own bills and bought new vehicles. He has now been held accountable for his despicable acts of greed. We hope that today’s conviction helps Souder’s victims heal and receive restitution.”

According to a statement of facts entered into evidence at yesterday’s hearing, between June 2007 and October 2013, Souder obtained money from at least 18 investors through the issuance of promissory notes. The defendant represented to his clients that he would invite the borrowed money online using his personal trading strategy. He promised to pay a return to these investors ranging up to 10 percent per quarter.

Souder admitted yesterday that he pooled most of the investors’ money into an account under his exclusive control and opened an online trading account operated out of his home. The defendant generated and sent quarterly statements via U.S. mail and emails to investors, informing them of the alleged status of their accounts, however, he never reported any losses to any of his investors. In all, Souder stole approximately $1.2 million from investors.

The defendant admitted yesterday in Federal Court that at no time did he generate any actual financial returns or profits for investors through online trading. The entire promissory note program was fraudulent and Souder only used approximately half of the funds he obtained from investors to trade online and incurred losses as a result of his online trading. Souder converted the remainder of the investor funds for his personal use, using the money to pay his mortgage and buy new vehicles. In addition, Souder used funds obtained from new investors to pay profit distributions to earlier investors.

In the fall of 2012, the Virginia State Corporation Commission (SCC) approached Souder and informed him that his actions violated the Virginia Securities Act and that he should cease his online trading activity immediately. However, Souder continued to trade and failed to return investors funds, as previously agreed.

The investigation of the case was conducted by the United States Postal Inspection Service and State Corporation Commission. Assistant United States Attorney C. Patrick Hogeboom III and Gauhar R. Naseem, Associate General Counsel-Financial Services, Office of General Counsel for the Virginia State Corporation Commission, will prosecute the case for the United States.

 

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