New Jersey Man Sentenced in Manhattan Federal Court to 10 Years in Prison in Multi-Million-Dollar Investment Fraud
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that CHARLES HUGGINS was sentenced in Manhattan federal court to 10 years in prison for perpetrating an $8 million investment fraud against dozens of victims across the United States. HUGGINS was convicted on October 10, 2014, following a two-week jury trial before U.S. District Court Judge Sidney H. Stein, who also imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara said: “Charles Huggins took millions of dollars of his investors’ money under false pretenses and used it to pay for personal expenses, including luxuries. For his crimes, Huggins has been sentenced to 10 years in prison and ordered to relinquish his ill-gotten gains.”
According to the Complaint and other filings in Manhattan federal court, and the evidence presented at trial:
For nearly a decade, through September 2011, HUGGINS and others solicited more than $8 million from dozens of investors through various companies, including companies known as JYork Industries Inc. (“JYork”) and Urogo Inc. (“Urogo”). Huggins and his co-conspirators made false and misleading representations that, among other things, they would use the investors’ money exclusively to mine gold and diamonds from Sierra Leone and Liberia. HUGGINS falsely promised investors that their investments were risk-free and that they would receive high rates of return, which he represented were based upon the profits generated by the sale of the gold and diamonds in the United States.
HUGGINS and his co-conspirators misappropriated the investors’ funds and used those funds for their own purposes or to repay other investors. Contrary to the representations of HUGGINS and his co-conspirators, most of the investment funds were used to pay HUGGINS’s personal expenses and for purposes entirely unrelated to what was represented to investors. For example, hundreds of thousands of dollars in investor funds were diverted to Orpheus Inc., a record label owned by HUGGINS, and used to pay, among other expenses, HUGGINS’s $7,200 monthly apartment rent in the Sutton Place neighborhood of Manhattan, for upkeep of HUGGINS’s Mercedes Benz, restaurant bills, clothes from expensive boutiques, and personal credit card bills. HUGGINS personally received hundreds of thousands of dollars in cash and gave tens of thousands of dollars in cash to other members of his family and his co-conspirators. A portion of the funds was used to make payments to other investors, as in a classic Ponzi scheme.
Dozens of victims across the United States lost their money in the scheme. When certain investors complained that they had not received the investment return that they were promised, HUGGINS gave those investors small repayments from funds invested by others, or claimed that he converted their investment into restricted shares of Oraco Resources, a publicly traded company of which Huggins was a majority shareholder, that were essentially worthless.
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In addition to his prison term, HUGGINS, 69, of Edgewater, New Jersey, was sentenced to three years of supervised release, and ordered to pay forfeiture and restitution of $2,383,255.26. HUGGINS was remanded following his conviction.
In sentencing HUGGINS, Judge Stein said, “This fraud was extensive, brazen, and sophisticated.” He also said that HUGGINS “lived a very luxurious lifestyle on the money of presumably hardworking individuals . . . people who were completely innocent.”
Two other defendants, Christopher Butchko and Anne Thomas, previously pled guilty for their roles in the fraudulent scheme, and await sentencing. Butchko pled guilty before Judge Stein on August 11, 2014, to conspiracy to commit wire fraud, and is scheduled to be sentenced on May 28, 2015 at 11:00 a.m. Thomas pled guilty before Judge Stein on August 18, 2014, to conspiracy to commit wire fraud, conspiracy to commit money laundering, structuring, and bank fraud, and is scheduled to be sentenced on June 24, 2015, at 3:30 p.m.
Mr. Bharara praised the work of the FBI in the investigation of this case. He added that the investigation is continuing.
The case is being handled by the General Crimes Unit of the United States Attorney’s Office. Assistant United States Attorneys Edward A. Imperatore and Andrea L. Surratt are in charge of the prosecution.