The investment litigation firm of Chapman & Associates initiated legal action on behalf of investors victimized by George Hudgins’ alleged Ponzi scheme, perpetrated in Nacogdoches.  In late 2008, Nacogdoches businessman George Hudgins was accused by federal prosecutors in the Eastern District of Texas of perpetrating a $90 million pyramid scheme.

In the complaint, filed in FINRA/NASD arbitration*, the Chapman & Associates attorneys allege that a large, publicly-traded financial institution assisted in the perpetration of the Hudgins scheme by breaching its duty to prevent violations of the securities laws and ensure the integrity of the marketplace.  That financial institution lent its prestige to the perpetration of the Hudgins scheme and failed to prevent sales to unsuspecting investors, according to the complaint.

An investigation by the law firm of Chapman & Associates determined that Hudgins pretended to be a successful trader and made representations to investors regarding his past successes in trading various commodities and futures indexes.  Hudgins is accused of falsely claiming past returns of between 22 and 99 percent annually, and a history of stellar profits for his investors.

George Hudgins pleaded guilty to three counts of criminal conduct in connection with the scheme he operated, and faces up to 20 years in federal prison.  His assets were frozen by the federal court, and a receiver was appointed to administer and distribute to his victims such assets as may be recovered, in conformity with the court’s order.

Hudgins was able to perpetrate his scheme as long as new investors deposited money with him, according to John Chapman, a securities attorney. When the flow of money slowed down, he became unable to pay the promised returns to earlier investors, and his scheme collapsed, leaving hundreds of victims with nothing but fictitious account statements and paper profits.

Click here to read important statements and disclosures regarding this case.

__________________________

* proceedings in FINRA/NASD arbitration, including the identities of the parties, are confidential in nature.