CEO of the Duncan Group Sentenced to Prison on Multi-Million Dollar Ponzi Scheme

ST. LOUIS, MO—The United States Attorney’s Office announced today that Aaron Duncan, the former CEO and owner of The Duncan Group, was sentenced to 63 months in prison and ordered to pay $3.8 million restitution.

According to court documents, Duncan represented that The Duncan Group was involved in real estate investments, including buying, rehabilitating and selling residential real estate. Duncan solicited investors in Missouri and around the United States to participate in his real estate projects through The Duncan Group by making false representations regarding the security of investments and the rates of returns promised. Bank records revealed that Duncan operated The Duncan Group investment program as a Ponzi scheme. Investors who were repaid on their principal investments were paid from funds obtained from other investors, rather than from returns on investments in real estate projects as promised and represented. At no time did Duncan advise investors that their returns, if paid at all, would be paid from other investors' principal. Typically, Duncan falsely told investors that their principal investments were secured by a specific property. For example, some investors were told that an investor's name would be placed on a particular deed or that investors were "securitized" by first mortgages on properties.

Bank records show that beginning no later than December 2005, Duncan was experiencing personal financial problems and was often late on his home mortgage payments.

The scheme operated from roughly January 2006 until Duncan advised investors of his intention to declare bankruptcy in October 2008. During the scheme, Duncan received investment principal from more than 50 investors who ultimately lost a total of approximately $3.9 million. Records recovered during the investigation revealed that Duncan only bought approximately ten (10) properties, and that these 10 properties lost money in total. Investor money was not used as promised and represented, instead, investor money was routinely used to pay other investors, pay routine expenses of the business, and to pay Duncan's personal expenses.

"The appearance of success can be a mask for a tangled financial web of lies," said Toni Weirauch, Special Agent in Charge of IRS Criminal Investigation, St. Louis Field Office. "Ponzi schemes thrive for a time on false claims about how the money is invested and the purported high returns. The lies are over and now Mr. Duncan will spend his time in prison."

Postal Inspector J.R. Ball, AIC for the US Postal Inspection Service St. Louis Field Office, said, "We are pleased to be part of this investigation and will always seek justice when it is determined the mail was used as part of a crime." He cautioned, "Some red flags are not recognized until after the fact, but anyone soliciting investments should always be willing to address your concerns and provide documents to back up their claims."

"Ponzi schemes always eventually collapse," said Roland J. Corvington Special Agent in Charge of the FBI St. Louis Division. "Aaron Duncan profited temporarily, but in the end, he will have to pay back what he stole, and he and his family will have to pay for the consequences of him going to prison."

Duncan, 33, Defiance, Missouri, pled guilty in April to one felony count of mail fraud and one felony count of money laundering, and appeared today for sentencing before United States District Judge Carol E. Jackson.

This case was investigated by Internal Revenue Service Criminal Investigation, Postal Inspection Service, Federal Bureau of Investigation, and the Securities Division of Missouri Secretary of State’s Office. Assistant United States Attorney John Bodenhausen handled the case for the U.S. Attorney’s Office.