A former middle school teacher has been charged with fraud after authorities accused him of operating a Ponzi scheme that took in more than $1 million from friends and family, including school district colleagues. Federal authorities announced that Carl David Wright, 52, had agreed to plead guilty to a single count of mail fraud in connection with the scheme, which carries a maximum possible prison term of twenty years. In a parallel action, the Commodity Futures Trading Commission ("CFTC") announced it was also filing civil charges against Wright.
Wright worked as a schoolteacher at Lincolnton Middle School in Cherryville, North Carolina since 1986, where he taught career and technical education, and also worked as a painter on the side. Sometime in 2008, he opened a futures trading account, and began soliciting family and friends to invest in a commodity pool he operated named Commodity Investment Group ("CIG"). Potential investors were promised short-term returns ranging from 10% to 30%, and understood that their funds would be used as loans for Wright's painting business, for the purchase and resale of gas stations, or to trade commodities such as grain futures, crude oil futures, or currency futures. At least some of these investors were provided with a Special Renewable Note Agreement (the "Note"), which often carried a 2-6 month term and a fixed interest rate. In total, Wright raised more than $1 million from investors.
However, rather than use investor funds as promised, Wright misappropriated funds and operated the classic Ponzi scheme by using incoming investor funds to pay returns to existing investors. Of the approximately $60,000 that was actually used to trade commodity futures, Wright suffered nearly 100% trading losses. Instead, the majority of funds was used to pay back investors, and Wright also misappropriated approximately $300,000 for his own personal use.
After Wright abruptly retired from the school district on March 15, 2013, an investigation by the U.S. Postal Service and North Carolina securities regulators resulted in Wright's confession to operating the scheme. At the time of the investigation, less than $1,000 of investor funds remained.
A sentencing hearing has not yet been scheduled.
A copy of the CFTC complaint is here.