Former Attorney Pleads Guilty To $7.8 Million Ponzi Scheme

A Houston man admitted that he operated a Ponzi scheme that defrauded victims out of at least $7.8 million.  Billy Frank Davis, 67, a former attorney, attracted potential investors by claiming he was a successful real estate investor.  Pleading guilty last week to a single count of wire fraud, Davis admitted that the operation was nothing more than a Ponzi scheme.  Wire fraud carries a maximum possible sentence of twenty years in prison, as well as a $250,000 criminal penalty.

According to the Federal Bureau of Investigation, Davis operated the scheme for over a decade, telling investors he could generate high returns through a variety of real estate investments.  Many of these investors knew Davis through his contacts at several prominent Houston golf courses, including Champions Golf Usa.  Some knew that Davis had previously been disbarred during a previous unrelated incident, but were reassured by his standing within the golf community and his representations to investors.  In total, more than 20 investors contributed millions of dollars.  However, While Davis did engage in a small amount of legitimate investment activity, he admitted that the majority of investor funds were not used as advertised.  Instead, Davis used investor funds to make Ponzi-style payments and support his lavish lifestyle.  

Davis is scheduled to be sentenced before United States District Court Judge David Hittner on January 11, 2013.  Coincidentally, Judge Hittner is the same judge that recently sentenced R. Allen Stanford to serve 110 years in federal prison for his $7 billion Ponzi scheme.  Davis has also agreed to pay restitution to his victims.  

For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.

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