Washington, D.C. Financial Consultant Sentenced to Almost Six Years in Federal Prison for Defrauding Santa Fe Business
|U.S. Attorney’s Office April 04, 2013|
ALBUQUERQUE—Daryl J. Hudson, III, 60, of Washington, D.C., was sentenced this afternoon to 70 months in federal prison followed by three years of supervised release. Hudson also was ordered to pay $1,875,000 in restitution to the victim of his crimes. Hudson’s sentencing was announced by U.S. Attorney Kenneth J. Gonzales and Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI.
Hudson, a graduate of Georgetown University Law Center who previously served as senior counsel in the Enforcement Division of the U.S. Securities and Exchange Commission, was indicted in May 2012 and charged with seven counts of wire fraud. At the time, Hudson was the chairman and CEO of Hampden Kent Group LLC (HKG), a Washington, D.C.-based company that advertised its ability to obtain debt funding for start-up businesses in the green energy sector.
In September 2012, a federal jury found Hudson guilty of all seven counts in the indictment after a nine-day trial. By its verdict, the jury concluded that Hudson defrauded Bluenergy Solarwind Inc. (BSI), a Santa Fe-based developer of green energy-related equipment, of $85,000 in 2011 by falsely representing that he could secure debt funding to help the company grow. The evidence at trial established that, between July 12, 2011 and August 19, 2011, Hudson designed and executed a scheme to defraud BSI by falsely representing that he had ready access to reliable sources of debt funding for BSI.
According to the trial testimony, in early 2011, the president of BSI began seeking approximately $80 million in debt funding so that BSI could manufacture new solar wind turbines. In an effort to obtain this financing, he attended networking events designed to connect entrepreneurs with funding sources and eventually was referred to Hudson as a person who could locate funding for BSI. By mid-July 2011, the BSI president contacted Hudson to discuss the prospect of engaging HKG to locate and place $80 million dollars in debt funding for BSI. On July 12, 2011, Hudson provided the BSI president with a draft service agreement setting forth the terms on which HKG could be hired to locate debt funding for BSI. The service agreement required BSI to pay a $300,000 retainer to HKG, with $150,000 to be paid up front and the balance to be paid upon receipt of a loan commitment from Hudson’s lender. Thereafter, on July 14, 2011, Hudson represented that, upon the signing of the service agreement, HKG would issue a loan commitment supported by treasuries that BSI could use to help obtain customer orders and equity funding.
In mid-July 2011, the BSI president and Hudson agreed to enter into the service agreement with the understanding that BSI would pay approximately $80,000 of the first part of the retainer payment by July 20, 2011, and pay the remaining $70,000 within 30 days. Thereafter, BSI wired a total of $85,000 to HKG’s bank account in partial payment of HKG’s retainer fee, and Hudson and the president of BSI executed the service agreement on July 21, 2011. On July 22, 2011, Hudson transmitted two documents to BSI; a document titled “Loan Commitment” and a document titled “Safekeeping Receipt.” The Safekeeping Receipt was a false and fraudulent document provided to BSI by Hudson as part of his scheme to defraud BSI.
Over the next two weeks, and as part of his scheme to defraud, Hudson caused the relationship with BSI to deteriorate, and the BSI president notified Hudson that BSI could no longer work with HKG. When the president of BSI requested the return of a portion of the retainer fee, Hudson refused. On August 11, 2011, after confirming that the Safekeeping Receipt provided by Hudson was a false and fraudulent document, BSI demanded the return of full $85,000 retainer. Hudson did not respond to BSI’s allegations regarding the falsity of the Safekeeping Receipt and instead claimed that BSI violated the service agreement by misusing the Safekeeping Receipt and demanding damages in the amount of $965,000.
Between July 12, 2011 and August 19, 2011, Hudson used wire communications, specifically three telephone calls, three e-mails and a facsimile, on seven separate occasions in order to execute the scheme to defraud BSI. Each of these wire communications served as the basis for the seven counts of wire fraud in the indictment.
This case was investigated by the Albuquerque Division of the FBI and was prosecuted by Assistant U.S. Attorneys John C. Anderson and Fred J. Federici, III.