The Sun Newspaper reported that Charles “Chuck” E. Hays a Rosemount, Minnesota man plead guilty to one count each of mail fraud, wire fraud and structuring transactions to avoid financial reporting requirements.
Mr. Hays’ operated his investment company, Crossfire Trading LLC, from January 2001 to February 2009. He told investors he was a day trader in stock index and crude oil futures contracts. He also claimed he pooled investments in commodities trading account and that investors could earn 3 percent per month.
Of course, this didn’t happen. He didn’t invest funds to trade in equities, instead he diverted funds to his personal use and other unauthorized purposes. He actually took new investors’ payments and gave it to earlier investors. Then Hays bought a $3 million yacht with investor funds, and his bank accounts contained approximately $1 million obtained through this Ponzi scheme.
This $20M Ponzi scheme may not have been as large as Bernie Madoff’s $50billion Ponzi Scheme. However, Hays does face maximum penalty of 20 years in prison on the mail fraud count, 20 years on the wire fraud count and 10 years on the structuring count. He also faces a maximum fine of $250,000 or the greater of twice the gross gain or loss for both the mail and wire fraud counts and a maximum fine of $500,000 on the structuring count. In addition, he also faces a civil enforcement action against him and his company, Crossfire, for fraud and misappropriation