Tyler, Texas – George D. Hudgins, of Nacogdoches, Texas, is facing federal charges of commodity fraud following a U.S. Commodity Futures Trading Commission (CFTC) investigation. The CFTC obtained a court order on May 13, 2008, freezing Hudgins’ assets and prohibiting the destruction of relevant documents.
According to a complaint filed in the U.S. District Court for the Eastern District of Texas, Hudgins, operating as George D. Hudgins L.L.C., fraudulently solicited investments for the 3737 Financial L.P. commodity pool, also known as Hudgins Group and Hudg-Investments. The alleged fraudulent activity has been ongoing since at least January 2005.
Hudgins is accused of making false and misleading statements to investors through promotional materials, presentations, and personal meetings. The CFTC alleges he misrepresented the commodity pool’s history, asset size, and profitability. For example, a January 2005 promotional packet claimed annual returns of 46 to 99 percent from 2000 to 2004, despite the pool not existing until November 2004.
Further allegations include a January 2007 presentation where Hudgins stated the pool had profits of 53.33 percent in 2005 and 22.5 percent in 2006. The CFTC claims the pool actually suffered losses of over $9.4 million in 2005 and over $11.1 million in 2006. He also allegedly overstated the portfolio value to approximately $80 million, when it was actually a negative $100,199.38.
The CFTC reports that the accounts associated with the pool incurred losses exceeding $25 million between 2005 and 2007. Hudgins is also accused of failing to register as a commodity pool operator with the CFTC.
The CFTC is seeking preliminary and permanent injunctions against Hudgins, along with the return of funds to defrauded investors, repayment of any ill-gotten gains, and civil monetary penalties for violations of the Commodity Exchange Act. Gregory Mocek, Director of Enforcement, emphasized the importance of investor education and due diligence.
The United States Attorney’s Office for the Eastern District of Texas is assisting the CFTC in this matter. Kathleen Banar, Kim Bruno, and James Deac of the CFTC Division of Enforcement are leading the case.
Source: CFTC.gov
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