P.T. Barnum should have said “there is a new scheme born every minute.” Yesterday a Wall Street office and Sinatra songs were used to lure would-be investors to a commodity fraudster who took investor funds for his own and ended in jail. Today, “social security maximization” seminars were used by a registered investment adviser to attract investors looking at retirement. Different day; different scheme; same end – fraudster pleads guilty while the investors lose their hard earned savings. U.S. v. Hudspeth, No. 2:17-cr-122 (E.D. Va.).
Roger Hudspeth and his firm, Dominion Investment Advisors, LLC, were Virginia state registered investment advisers. Mr. Hudspeth and his firm held social security maximization seminars, seeking clients who were approaching retirement. Those who attended were directed to purchase securities that were part of offerings created by Mr. Hudspeth’s associate. The associate had been banned from the securities business by FINRA for fraudulent dealings.
Rather than being safe, conservative investments, the securities from the offerings were unregistered, illiquid and at best highly speculative. Nevertheless, Mr. Hudspeth used a series of misrepresentations to convince potential investors that the investments had merit. Over $6 million was raised from investors. Mr. Hudspeth received about $700,000 for his efforts.
Early in 2016 the Virginia State Corporation Commission entered a judgment order against Mr. Hudspeth, revoking his licenses. His firm was permanently closed. Mr. Hudspeth was prohibited from engaging in any investment advisory activities in the future.
Yesterday Mr. Hudspeth pleaded guilty to one count of investment adviser fraud and one count of conducting unlawful monetary transactions. Sentencing is scheduled for January 22, 2018.
Seminar: Annual Private Funds Symposium, Chair, Genna Garver, Dorsey & Whitney LLC, September 27, 2017, New York, New York, here