Dudley Sentenced To 60 Months In Federal Prison In Connection With Investment Fraud Scheme
SALT LAKE CITY - John S. Dudley, age 59, of Sandy, who pleaded guilty to wire fraud in February in connection with a fraudulent investment scheme, will serve 60 months in federal prison. U.S. District Judge Robert J. Shelby, who imposed the sentence this week, also ordered Dudley to pay $6.8 million in restitution to victims of the fraud scheme.
“Mr. Dudley's web of lies damaged or destroyed the financial future of more than a hundred victims,” David B. Barlow, U.S. Attorney for Utah, said today. “After serving his five-year term of incarceration, Mr. Dudley will be deported from the United States. These steps should help make sure that Mr. Dudley is not able to harm residents of Utah again.”
Dudley was charged in a 17-count indictment returned in May 2011 in connection with what the indictment alleged was a scheme to induce individuals to invest money with him for use in various investment programs.
The indictment alleged Dudley made a variety of representations to potential investors, including telling them they could expect monthly returns of 5-10 percent; that he had not suffered a trading loss since 1978; that investors’ funds would be used exclusively for investment purposes; that he had personally done very well in his investments and had never made less than 5 percent per month over the last 30 years; that investors’ money was backed by a “senior life settlement policy” that reduced or eliminated investors’ risk of loss; and that investing with him was an exclusive opportunity with only a limited number of investors allowed to invest with him at one time.
As a part of the plea agreement reached with federal prosecutors, Dudley admitted he sent an e-mail to an individual, identified as U.A. in the plea agreement, with the subject line “Re: Castle Creek Bank Details.” He admitted that the e-mail was a part of his attempt to execute the fraud scheme by obtaining money under false representations. Investor U.A. is identified in the indictment as a Utah Department of Commerce’s Division of Securities investigator acting in an undercover capacity in the indictment.
“The successful prosecution of John Dudley was a joint effort between federal and state agencies in addressing an egregious Ponzi scheme. Mr. Dudley’s victims, ranging from young adults to the elderly, funded a lavish lifestyle which included a $1.5 million home, luxury cars and exotic vacations. The FBI and its law enforcement partners are committed to investigating and prosecuting those who fund a luxurious lifestyle at the expense of hard-working, trusting investors. Some victims in these types of cases have their life savings tied up in fraudulent investments and never fully recover. We encourage the public to remain vigilant—check your investments; ask your investment manager hard questions; obtain timely investment updates and reports; and report suspected fraud to the FBI,” Mary Rook, Special Agent in Charge of the FBI in Salt Lake City, said today.
“Mr. Dudley touted various investment programs, including a foreign exchange trading program, mining speculation, and European and domestic stock options. He then diverted the investors’ funds for his own personal benefit,” Paul Camacho, Special Agent in Charge of IRS Criminal Investigation, said today. “Investors, as we often see in our trusting community, became victims to Mr. Dudley’s scheme. Those who operate Ponzi schemes have mastered the ability to earn the trust and confidence of their victims, and these crimes are very personal. We urge the public to be cautious and diligent in deciding where to invest their hard-earned money,” Camacho said.
The case is being prosecuted by the U.S. Attorney’s Office in Salt Lake City and investigated by special agents and investigators of the FBI, IRS Criminal Investigation, and the Utah Department of Commerce.