Banking

July 24, 2014

Ponzi operator pleads guilty to $2.5M Charlotte scheme

A man accused of running a Ponzi scheme that bilked about 25 Charlotte investors out of more than $2.5 million has pleaded guilty to securities fraud, U.S. Attorney Anne Tompkins announced Thursday.

A man accused of running a Ponzi scheme that bilked about 25 Charlotte investors out of more than $2.5 million has pleaded guilty to securities fraud, U.S. Attorney Anne Tompkins announced Thursday.

Claude Darrell McDougal, 55, formerly of Charlotte, pleaded guilty in federal court to orchestrating the scheme from 2006 to 2010. He faces up to 20 years in prison and a $5 million fine.

Prosecutors said McDougal’s clients thought their money would be invested in securities offered by Charlotte-based US Financial Alliance Consultants LLC, which he created in 2005.

The company, which court records show was never registered as a securities dealer in North Carolina or elsewhere, guaranteed fixed rates of return of 6 percent to 15 percent annually, prosecutors said. According to court records, McDougal was not registered to sell securities in North Carolina or in any other state, following termination from his previous employer in August 2009.

McDougal invested only $580,000 of investors’ money and paid them $450,000 in “supposed payouts,” prosecutors said. According to court records, the payouts were actually funds from new investors, not profits generated by investing clients’ money, prosecutors said.

McDougal admitted to using about $1.19 million of investors’ money to support his own lifestyle, including on dinners, jewelry, electronics, hotel stays, furniture and business-related expenses, prosecutors said.

Prosecutors said his victims were often elderly and the funds they invested were most, if not all, of their life savings.

McDougal has been released on bond. A sentencing date has not been set.

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