Queen Shoals Ponzi Scheme Defendant Pleads Guilty
A United States District Court Judge for the Western District of North Carolina sentenced Gary D. Martin, of St. Augustine, Florida, to a 10-year prison sentence for his participation in a 30 million dollar commodities and foreign exchange Ponzi scheme. As reported, Martin pled guilty in February 2012 to one count of money laundering conspiracy, and was sentenced this week to the statutory maximum 10-year prison term. Along with his prison sentence, he was also ordered to pay $28.5 million in restitution to scheme victims.
According to court documents, Martin, through Queen Shoals Consultants, LLC and the Queen Shoals web site and other means, also made false claims about Queen Shoal’s financial expertise in “Self-Directed IRA Strategies and Fixed Rate Accounts.” Martin held Queen Shoals out as “leaders in Professional Private Placement Retirement Planning” and falsely claimed that Queen Shoals had a “proven method of diversification [that] spreads the risk nicely for a balanced portfolio,” when, in fact, Queen Shoals offered no such diversification and funneled victim funds solely into the scheme.
Martin and his wife, Brenda, acted as so-called “consultants” who, after forming Queen Shoals Consultants, LLC solicited potential investors by telling them that Queen Shoals Consultants had over 20 years of experience in financial services, and that Martin had vast experience dealing with commodities and foreign currencies. Investors were promised annual returns ranging from eight to twenty-four percent, along with an additional 1% to investors who rolled over their IRA balances.
Through Queen Shoals Consultants, the Martins raised over $20 million from investors through in-person solicitations, written materials, and a website. All funds raised by the Martins were then turned over to Sidney Hanson (the operator of the Ponzi scheme), who paid the Martins at least $1.44 million in undisclosed referral fees.
However, Queen Shoals was far from a legitimate operation. Instead, Hanson masterminded an elaborate Ponzi scheme that incurred massive losses in the minimal forex trading that actually did occur. The remainder of the funds taken in from investors were used to pay quarterly interest payments to existing investors, referral fees to so-called “consultants”, and to sustain Hanson’s lavish lifestyle.
Martin and his wife previously agreed to settle (see here and here) an action brought by the U.S. Commodity Futures Trading Commission by agreeing to permanent bans from the commodities trading industry, as well as agreeing to make full restitution to defrauded investors. Completing the pile-on, the SEC also brought an action, see here.
Between Hanson and the Martins, over $9 million has been paid into the Court registry for eventual distribution to victims.
The attorneys at Fuerst Ittleman David & Joseph, PL have extensive experience litigating against the federal government in both civil and criminal matters involving highly regulated industries. You can reach at attorney by emailing us at firstname.lastname@example.org or by calling us at 305.350.5690.