Trader Charged For $9M Ponzi Scheme Not Singled Out: Judge
By Joyce Hanson of Law360.com
An Illinois federal judge on Thursday refused to dismiss an indictment against a Chicago trader who has been charged with wire fraud for orchestrating an alleged $9 million Ponzi scheme, ruling that he wasn’t singled out for prosecution while other similarly situated violators were let off the hook.
U.S. District Court Judge John Z. Lee said Ludiera Capital LLC President Nick Wurl admitted in a government interview that he made false statements to investors and hid trading losses, and his argument saying Fannie Mae executives and ex-Goldman Sachs employee Fabrice Tourre were accused of similar conduct but never charged in a criminal case failed to convince the judge that Wurl’s case should be dismissed.
“While none was criminally prosecuted, each faced civil fines and penalties,” Judge Lee said. “The Fannie Mae executives, with one exception, reached settlements with the Securities and Exchange Commission and other government agencies. Tourre was found liable at a civil trial and ordered to pay $850,000.”
Although represented by legal counsel, Wurl filed a pro se motion on May 9 to dismiss the indictment, arguing selective prosecution and egregious prosecutorial misconduct on the part of the government, according to court filings.
Judge Lee also slapped down Wurl’s claims that he was indicted due to his youth, at age 26, socioeconomic status and lack of political connections.
“Wurl argues that the average age of prosecutors would make them more likely to go after someone like Wurl, who is 26, rather than someone older (presumably because the prosecutors assigned to this case are themselves older than Wurl). This argument is based on nothing more than speculation,” the judge said.
Wurl’s original indictment, handed down in May 2015, included only one count of defrauding investors. In January, Wurl rejected a potential plea deal that had been offered last fall and told prosecutors that he wants to go to trial.
The U.S. Commodity Futures Trading Commission in June filed fraud, misappropriation and false statements charges against Wurl and his company, saying that his investment pool “was little more than a shell company used to defraud pool participants and enrich defendants at their expense.”
The federal government on Aug. 3 filed a superseding indictment against Wurl for the alleged orchestration of a $9 million Ponzi scheme that involved lying about building a railroad facility meant to transport corn and wheat, according to documents filed in Illinois federal court.
Under the new indictment, Wurl has been charged with 10 counts related to receiving money as a result of the scheme and sending false financial information to investors as part of the fraud. If convicted, he will be required to forfeit $9 million of his personal assets, including money held in various bank and brokerage accounts, a 2014 Chevrolet Corvette and a 2015 GMC Yukon Denali, the government said.
The alleged scheme began no later than July 2013 and continued until May 2015, as Wurl pulled in at least $10 million from more than 50 people through the offer and sale of shares in Ludiera’s portfolio, prosecutors said. In soliciting those investors, Wurl lied about the nature of his company’s business, its financial condition, the expected return on investment, the risks involved, the status of investments and the use of investors’ funds, according to the government.
Among these false statements and misrepresentations were claims that investors’ funds had increased by more than 42 percent in 2014, vastly inflated bank statements, a fake letter that was meant to prove that Ludiera had been audited by a reputable accounting firm and a claim that the company had received U.S. Department of Agriculture funding to buy land and build a large railroad loading facility.
Wurl could not be reached for comment. Representatives for the government declined to comment on Thursday.
Wurl is appearing in the action pro se. His legal counsel was Imani Chiphe of the Federal Defender Program, terminated March 8; Sami Z. Azhari, terminated July 20; and James D. Tunick, terminated July 20.
The government is represented by assistant U.S. attorneys Jacqueline O. Stern and Joseph A. Stewart.
The case is USA v. Wurl, case number 1:15-cr-00306, in the U.S. District Court for the Northern District of Illinois.
The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.