Former El Paso County Deputy Sheriff Pleads Guilty as Part of Ponzi Scheme
|U.S. Attorney’s Office March 20, 2013|
DENVER—David N. Hawkins, age 43, of Colorado Springs, Colorado, pled guilty late last week before U.S. District Court Judge Robert E. Blackburn to one count of wire fraud and one count of money laundering, the United States Attorney’s Office, the Federal Bureau of Investigation, and IRS-Criminal Investigation announced. Hawkins, who is free on bond, is scheduled to be sentenced by Judge Blackburn on June 7, 2013, at 11:00 a.m.
Hawkins was originally charged by information on January 2, 2013. He waived his right to be charged by indictment. According to the facts contained in the information as well as the stipulated facts contained in the plea agreement, Hawkins was employed as a deputy sheriff for the El Paso County, Colorado Sheriff’s Office. In 2006, Hawkins attended training courses on how to trade profitably in foreign currencies and the exchanges of foreign currencies (hereinafter, the FOREX or foreign currency exchange markets). He also attempted to self-educate himself concerning trading in the FOREX markets.
From in or about November 2009, when Hawkins obtained his first FOREX trading client and continuing through early December 2011, he obtained in excess of $1.2 million from his colleagues at the El Paso County Sheriff’s Office, other law enforcement officers in El Paso County, and their respective friends and relatives for the purpose of trading these funds in the FOREX markets on their behalf. He had approximately 73 investors, most investors using personal savings or retirement funds accumulated over the years as their source of the investment funds. Estimated losses to investors collectively total approximately $215,643.
Hawkins made several false representations to investors, including investors would be guaranteed a return of 10 percent per month (or 120 percent per annum). These representations were false and at no time were the investments ever profitable.
Over time, Hawkins removed investor funds from FOREX trading accounts into bank accounts he controlled. He would then use these funds either for his own personal expenses, for personal investments unrelated to FOREX investments, or to fund payments to those of his investors who requested to withdraw their principal investments. At one point, he used investor funds toward the purchase of two personal automobiles, and mid-2011 he used in excess of $150,000 in investor funds to purchase franchises and to set up operations for two semi-professional indoor arena football teams, one located in Danville, Illinois, and the other in Mesquite, Texas. The teams never became operational.
“Ponzi schemes have taken the hard earned money of all too many Americans in the last few years,” said U.S. Attorney John Walsh. “In this case, a deputy sheriff took money meant for investment,and spent it on a variety of things, including personal items, giving no thought to the financial damage he is causing the colleagues, family, and friends who trusted him. He will now face the consequences of his crimes.”
“If it sounds too good to be true it probably is. People should diligently check out claims of unusually high rates of return before investing. Don’t become a victim of an investment scam,” said Stephen Boyd, Special Agent in Charge, IRS-Criminal Investigation, Denver Field Office.
“Working with our partners, the FBI is committed to investigating complex white-collar crimes, especially when someone in a position of trust misuses that position to exploit innocent investors,” said FBI Denver Acting Special Agent in Charge Steve Olson.
Hawkins faces one count of wire fraud which carries a penalty of not more than 20 years in federal prison and a fine of up to $250,000. He also faces one count of money laundering which carries a penalty of not more than 10 years in federal prison and a fine of up to $250,000.
This case was investigated by the Federal Bureau of Investigation (FBI) and Internal Revenue Service-Criminal Investigation (IRS-CI).
The case is being prosecuted by Assistant U.S. Attorney Kenneth Harmon.