Fraud Charges Stick to Former SEC Counsel

(CN) - A federal jury in New Mexico convicted a former Securities and Exchange Commission senior attorney of wire fraud.

Daryl Hudson III, 59, of Washington, D.C., was convicted of seven counts of wire fraud Friday in Albuquerque. He faces up to 30 years in federal prison and $1 million in fines for each count.

Hudson was chairman and CEO of Hampden Kent Group, a Washington-based project finance and development company that touted its ability to secure debt funding for green energy start-up businesses.

The jury concluded Hudson schemed to rip off Santa Fe-based Bluenergy Solarwind Inc., which was seeking $80 million in debt funding for new solar wind turbines.

Hudson misrepresented that, upon signing a service agreement, his company would issue a loan commitment supported by $500 million in treasuries that Bluenery could use to help obtain customer orders and equity funding, according to the indictment.

Bluenergy and Hudson eventually entered into a service agreement in which the company would pay approximately $80,000 of a retainer fee by July 20 and would pay another $70,000 within 30 days. When funding was secure, Bluenergy would pay another $150,000 for a total fee of $300,000.

After $85,000 was wired to Hampden Kent, Hudson transmitted a loan commitment document and a safekeeping receipt to Bluenergy. Prosecutors said the document was fraudulent.

As the companies' business relationship soured, Hudson would allegedly express frustration over Bluenergy's supposed failure to produce sufficient letters of credit and customer information.

Within weeks, Bluenergy sought to terminate the relationship and offered Hudson $25,000 while returning the remaining $60,000.

"Hudson abruptly refused this request and hung up," according to the indictment.

After Bluenergy confirmed the receipt was a fraud and demanded return of the $85,000, Hampden Kent accused Bluenergy of being in breach of contract by misusing the receipt and sought $965,000 in damages, prosecutors said.

Hudson testified in his defense and denied any criminal wrongdoing. The jury deliberated for over seven hours before returning a guilty verdict on each of the seven counts.

Hudson was with the SEC from 1982 to 1985 and graduated from the Georgetown University Law Center in 1979.

He remains free on bond pending sentencing, which has yet to be scheduled.

Follow @davejourno

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