A federal jury needed just six
minutes to return with a guilty verdict against a Texas man on trial for a $11
million Ponzi scheme. Gary Lynn McDuff, 58, was convicted of one count of
conspiracy to commit wire fraud and one count of money laundering, each of
which carry a maximum sentence of 20 years in prison and criminal
penalties. While federal sentencing guidelines will likely call for a
lesser sentence than the maximum, a previous 1994 fraud conviction is likely to
result in a more severe sentence for McDuff than a first-time offender.
A co-conspirator of McDuff's, Gary Lancaster, owned and
operated Lancorp Investment Fund ("Lancorp") in West Linn, Oregon.
Along with McDuff and another co-conspirator, Robert Thomas Reese, the
men solicited investors for Lancorp by claiming that the fund was only
authorized to invest in debt securities with at least an "A+" rating,
that Lancorp was registered with securities regulators, and that Lancaster was
a registered investment adviser under the Investment Adviser Act of 1940.
Investors were assured that Lancorp had secured an insurance policy
to protect against possible investor losses. Based on these promises,
more than 50 investors entrusted over $10 million with Lancorp.
However, these representations were all false, and
Lancorp was nothing more than a Ponzi scheme that used newly-incoming investor
funds to make payments to existing investors. Indeed, investors were not
told that Reese had previously been the subject of a cease-and-desist order
from the State of California for his participation in a previous fraudulent
scheme or that McDuff had previously been convicted of fraud in 1994.
Lancaster was sentenced to prison for his role in the
scheme, while Reese has since passed away.
McDuff's indictment is here.
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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