A North Carolina federal judge handed down a 10-year prison sentence to a Florida man for his participation in a commodities and foreign exchange Ponzi scheme that duped investors out of nearly $30 million. Gary D. Martin, of St. Augustine, Florida, received the sentence from United States District Judge Robert Conrad for his role in soliciting tens of millions of dollars from investors that was subsequently funneled into a massive Ponzi scheme. Martin pled guilty to one count of money laundering conspiracy approximately a year ago, and received the maximum 10-year term available under the statute. Along with his sentence, he was also ordered to pay $28.5 million in restitution to scheme victims.
According to authorities, Sidney Stanton Hanson ("Hanson") operated a network of entities, including Queen Shoals, LLC ("Queen Shoals"), which purported to be in the forex and commodities trading business. Hanson, who pled guilty earlier this year to charges of securities fraud, mail fraud, and money laundering, did not disclose to investors the use of more than 30 "consultants" who were paid referral fees in return for funnelling customer funds to Queen Shoals. Martin and his wife, Brenda (the "Martins"), acted as so-called "consultants" who, after forming Queen Shoals Consultants, LLC ("QSC"), solicited potential investors by telling them that QSC 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 QSC, 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 Hanson, 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. In April 2011, Hanson was sentenced to twenty-two years for his role in the scheme and also ordered to pay more than $33 million in restitution.
Martin and his wife previously agreed to settle 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. Between Hanson and the Martins, over $9 million has been paid into the Court registry for eventual distribution to victims.