Crime & Courts

Former Charlotte resident sentenced in Ponzi scheme

A former Charlotte resident was sentenced Thursday to six years and six months in prison for orchestrating a Ponzi scheme that defrauded investors of more than $2.5 million, Acting U.S. Attorney Jill Westmoreland Rose said.

Claude Darrell McDougal, 56, promised at least 25 victims in Charlotte and elsewhere that their money would be invested in securities, in the form of promissory notes offered by “US Financial Alliance Consultants LLC,” Rose said.

McDougal created Charlotte-based Financial Alliance in 2005 and never registered it as a dealer of securities in North Carolina or elsewhere, according to court records.

McDougal was not registered to sell securities in North Carolina or any other state, after he was fired from a previous employer in August 2009, court records show.

Prosecutors said McDougal induced his victims to invest with Financial Alliance by falsely guaranteeing fixed rates of return between 6 percent and 15 percent annually.

Many of the investors were elderly and invested most, if not all, of their life-savings with McDougal, prosecutors said.

According to court records, over the three-year scheme, he invested only $580,000 of the victims’ money and used about $450,000 to pay some victims supposed “payouts” from profits made on investments.

Those payments were not based on profits but came from funds contributed by new investors, making for what’s commonly referred to as “Ponzi” payments, prosecutors said.

McDougal used about $1.19 million of the investors’ funds to support his lifestyle, including to buy dinners, jewelry and electronics, and to pay for hotel stays, furniture and other business-related expenses, according to court records.

McDougal pleaded guilty to securities fraud in July 2014.

After his sentencing hearing, McDougal was released on bond. He will be ordered to report to the Federal Bureau of Prisons once a federal facility is designated.

Joe Marusak: 704-358-5067, @jmarusak

  Comments