CHICAGO (AP) – A partner in a Chicago web radio sports show pleaded guilty Thursday to swindling as many as 250 investors out of more than $6 million in a Ponzi scheme that guaranteed risk-free monthly returns of at least 10 percent.
David Hernandez, 49, who fled downstate and attempted to commit suicide after the scheme was exposed, appeared before U.S. District Judge Robert Gettleman and pleaded guilty to a single count of mail fraud.
The charge carries a maximum sentence of 20 years and a $250,000 fine. Hernandez could get up to 14 years under federal sentencing guidelines.
Hernandez was one of two men who in early 2009 launched ChicagoSportsWebio.com – a now defunct online radio show with popular host Mike North. North has not been accused of any wrongdoing, and the show does not figure into the allegations against Hernandez.
In his 23-page plea agreement, Hernandez acknowledged that his Next Step Financial Services guaranteed would-be investors who put in $13 million risk-free returns of 10 percent to 16 percent every month.
Actually, he wasn’t even investing their money.
Instead, he admitted operating a Ponzi scheme in which the money flowing in from new would-be investors was paid out to those who already had put in cash.
After his scheme began to collapse last June, Hernandez fled the city and was arrested later in downstate Normal. He was taken from the hotel where he was staying with injuries that included a bandaged wrist and arm.
“I tried to commit suicide last June,” he told Gettleman.
The amount of prison time he gets may depend on how two disputes between the government and the defense are resolved. Prosecutors say he swindled more than 250 people, while defense attorney John Meyer says it was fewer.
The government says the size of the loss was $6.8 million; the defense says it was more like $6.3 million.
Prosecutors said the original estimate of the loss was in the $3.5 million range but that more losses have been found since then.
Assistant U.S. Attorney Brian Hayes told Gettleman that the government is not making a recommendation for now on whether Hernandez has accepted responsibility for his crimes – something that could get him a lower sentence.
Read the original article from Herald & Review.