Preet Bharara, the United States Attorney for the Southern District of New York, announced today that CHARLES HUGGINS was found guilty in Manhattan federal court of perpetrating a multimillion-dollar investment fraud against dozens of victims across the United States. HUGGINS was convicted following a two-week jury trial before U.S. District Judge Sidney H. Stein.
According to the Complaint and other filings in Manhattan federal court, and the evidence presented at trial:
From 2008 through at least September 2011, HUGGINS and others solicited millions of dollars from various investors through companies known as JYork Industries Inc. (“JYork”) and Urogo Inc. (“Urogo”) with false and misleading representations that he would use the investors’ money exclusively to mine gold and diamonds from Sierra Leone and Liberia. HUGGINS falsely promised investors, among other things, high rates of return on their investments, which he represented were based upon the profits generated by the sale of the gold and diamonds in the United States.
In fact, from 2008 through at least September 2011, HUGGINS and his co-conspirators misappropriated millions of dollars of 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, the vast majority of the investment funds was 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 section of Manhattan, for upkeep of HUGGINS’s Mercedes Benz, restaurant tabs, 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. 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 nearly worthless.
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HUGGINS, 68, of Edgewater, New Jersey, was convicted of one count of conspiracy to commit wire fraud and one count of wire fraud. Each of those counts carries a maximum potential penalty of 20 years in prison and a fine of the greater of $250,000 or twice the gross gain or loss derived from the offense. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. HUGGINS is scheduled to be sentenced in January 2014 before Judge Stein.
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.