Stockbroker Pleads Guilty To Securities Fraud For Operating $1.4 Million Ponzi Scheme
CHARLOTTE, N.C. – Charles Caleb Fackrell, 36, of Booneville, N.C. appeared before U.S. Magistrate Judge David S. Cayer today and pleaded guilty to one count of securities fraud for operating a $1.4 million Ponzi scheme, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.
U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and North Carolina Secretary of State Elaine F. Marshall.
According to filed court documents and today’s plea hearing, beginning from in or about May 2012 to about December 2014, Fackrell executed a Ponzi scheme using approximately $1.4 million in funds he solicited from at least 20 victim investors in Wilkes County and elsewhere. According to court records, Fackrell was a stockbroker who used his position of trust to solicit victim investors and steer them away from legitimate investments to purported investments with “Robin Hood, LLC,” “Robinhood LLC,” “Robin Hood Holdings, LLC,” “Robinhood Holdings, LLC” and related entities (collectively, “Robin Hood”). These were entities Fackrell controlled and through which he could access the victims’ funds.
Court records indicate that Fackrell solicited his victim investors by making false and fraudulent representations, including that the investors’ money would be invested in, or secured by, gold and other precious metals, when in fact Fackrell spent only a fraction of investor money on such assets. According to court records, Fackrell also falsely told victims that Robin Hood was a very safe investment, paying guaranteed annual returns of 5% to 7%. According to court records, contrary to the promises he made to his victims and instead of investing the victims’ funds as promised, Fackrell used the majority of the money to cover personal expenditures, including hotel expenses, groceries, and medical bills, to make purchases at various retail shops and to make large cash withdrawals. Fackrell also used a portion of the victims’ money to make purported “interest” payments to investors who demanded their money back and to induce further investments from existing investors and their friends and family members. In all, according to court records, Fackrell diverted over $700,000 of his victims’ money – nearly half of the investor money he obtained – back to other investors in Ponzi fashion payments.
According to court records, in an attempt to conceal his fraud, Fackrell asked a third party to destroy a computer and documents related to the Ponzi scheme, explaining that he was in trouble with the U.S. Securities and Exchange Commission.
“Fackrell is an unscrupulous scammer that betrayed those who trusted him with their nest egg. Instead of using his clients’ money for legitimate investments, as he promised he would, Fackrell focused on enriching himself and perpetuating his fraud through lies. Thanks to the great work of our law enforcement partners Fackrell’s business of siphoning his clients’ money is over,” said U.S. Attorney Rose. “This case is an example of how financial predators will use lies and deceit to get their hands on people’s hard-earned money, quickly turning trusting investors into financial fraud victims,” Rose added.
“At its most basic level, this is a case about greed and the abuse of trust. Charles Fackrell had no regard for the victims he betrayed, making empty promises for big investment returns. Now he will be held accountable for his actions because of the agents and prosecutors who worked so diligently to bring him to justice,” said Special Agent in Charge Strong.
“This case is particularly egregious because unlike the majority of registered stock brokers, this scam artist betrayed the trust of his clients for his own personal gain and benefit,” Secretary Marshall said. “We are extremely proud of assembling a case that has resulted in a guilty plea today.”
Fackrell was detained following his guilty plea. The securities fraud charge carries a maximum prison term of 20 years and a $5 million fine. A sentencing date for the defendant has not been set.
The case is being investigated FBI and the Securities Division of the North Carolina Department of the Secretary of State. U.S. Attorney Rose also thanked the North Carolina State Bureau of Investigation, the Yadkinville Police Department and Kinston’s Department of Public Safety for their invaluable assistance in this investigation.
The prosecution is being handled by Assistant United States Attorney Daniel Ryan of the U.S. Attorney’s Office in Charlotte.