Michigan Man Convicted Of $46 Million Ponzi Scheme

After discovering that he was entrusting investor funds to a company operating a Ponzi scheme, a Michigan man did the opposite of what most might do next: he started his own Ponzi scheme by continuing to recruit investors based on promises of astronomical returns.  On Friday, a federal jury convicted David W. McQueen of fifteen charges based on the scheme, which caused losses of over $40 million to nearly 1,000 victims.  McQueen was convicted of six counts of mail fraud, six counts of money laundering, and three counts of tax evasion.  Each count of mail fraud and money laundering carries up to a 20-year prison sentence, meaning McQueen will likely face a substantial time in federal prison.

McQueen initially started out investing in a company called Maximum Return Transactions ("MRT"), a Florida company operated by James Clements and Zeina Smidi that purported to trade in foreign currencies.  MRT promised monthly returns ranging from 5% to 11%, and McQueen was one of these investors.  Beginning in 2006, McQueen began receiving 10% monthly returns from MRT.  After the passage of several months of receiving the promised returns from MRT, McQueen devised a plan to recruit other investors to invest in MRT through him, with those investors receiving 5% monthly payments and McQueen pocketing the remaining 5%.  McQueen's entity, Accelerated Income Group ("AIG"), also recruited insurance agents to sell the investment to their clients.  For a short period of time, this form of arbitrage was successful.

However, in mid-2007, MRT stopped making payouts to investors (and was later the target of a civil enforcement action by the Securities and Exchange Commission which alleged it was a Ponzi scheme).  However, rather than notifying AIG's investors of the failure of MRT, McQueen continued soliciting investors based on the promised returns.  In an attempt to reconstruct the returns from MRT, McQueen placed nearly 1/3 of investor funds in a variety of speculative investments that resulted in severe losses.  Despite these losses, investors continued to receive falsified account statements showing consistent account gains.  

In August 2009, federal authorities executed search warrants and seized approximately $430,000 from McQueen.  In a last-ditch attempt to rescue his scheme, McQueen took approximately $400,000 in hidden funds from a New Zealand bank account to make more speculative investments - which also failed.

Following the jury's verdict, McQueen was remanded into custody until his sentencing.