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Monday
Jan142013

Former Lawyer Receives 10-Year Sentence For $7.8 Million Ponzi Scheme

In a courtroom packed with victims wearing a red ribbon to show solidarity, a former Houston lawyer who admitted to masterminding a real-estate Ponzi scheme that duped investors out of nearly $8 million was sentenced to serve ten years in federal prison.  Billy Frank Davis, 68, received the sentence from United States District Court Judge David Hittner, who took the unusual step of making an upward departure from the recommended range computed using federal sentencing guidelines.  Davis had previously agreed to a plea deal last year with prosecutors in which he pled guilty to a single count of wire fraud, which carries a statutory maximum term of twenty years. 

According to authorities, Davis held himself out as a successful real estate investor, telling potential investors that he could generate market-beating returns with little to no risk.  Davis was well-known at several Houston-area golf courses, where he frequently solicited investors and touted his investing prowess.  Man were convinced of the scheme's legitimacy after scheduled interest payments were made without a hitch for over a decade.  In total, more than 20 investors contributed millions of dollars.  

While Davis used a small portion of investor funds for legitimate investment activity, the majority was used to perpetrate a classic Ponzi scheme by using newly-invested funds to pay returns to older investors. Davis also misappropriated funds to sustain his lavish lifestyle.  Authorities pegged total victim losses at nearly $8 million.

Following the completion of his sentence, Davis must serve three years of supervised release.  He was also ordered to pay $7.8 million in restitution to his victims.

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