Jury Needs Six Minutes to Convict Texas Man of $11 Million Ponzi Scheme

A federal jury needed just six minutes to return with a guilty verdict against a Texas man on trial for a $11 million Ponzi scheme.  Gary Lynn McDuff, 58, was convicted of one count of conspiracy to commit wire fraud and one count of money laundering, each of which carry a maximum sentence of twenty years in prison and criminal penalties.  While federal sentencing guidelines will likely call for a lesser sentence than the maximum, a previous 1994 fraud conviction is likely to result in a more severe sentence for McDuff than a first-time offender.

A co-conspirator of McDuff's, Gary Lancaster, owned and operated Lancorp Investment Fund ("Lancorp") in West Linn, Oregon.  Along with McDuff and another co-conspirator, Robert Thomas Reese, the men solicited investors for Lancorp by claiming that the fund was only authorized to invest in debt securities with at least an "A+" rating, that Lancorp was registered with securities regulators, and that Lancaster was a registered investment adviser under the Investment Adviser Act of 1940.  Investors were assured that Lancorp had secured an insurance policy to protect against possible investor losses.  Based on these promises, more than 50 investors entrusted over $10 million with Lancorp.

However, these representations were all false, and Lancorp was nothing more than a Ponzi scheme that used newly-incoming investor funds to make payments to existing investors.  Indeed, investors were not told that Reese had previously been the subject of a cease-and-desist order from the State of California for his participation in a previous fraudulent scheme or that McDuff had previously been convicted of fraud in 1994.  

Lancaster was sentenced to prison for his role in the scheme, while Reese has since passed away.  

McDuff's indictment is here.