Ponzi Scam Alleged in St. Louis

ST. LOUIS (CN) - Federal prosecutors accuse a man of duping investors of $2.5 million in a Ponzi scheme. Aaron W. Duncan, 32, was indicted on four counts of wire fraud, seven counts of mail fraud and nine counts of money laundering.

Prosecutors say Duncan ran "The Duncan Group" and told investors he was making big returns by buying and rehabbing foreclosed properties, buying rental properties and commercial real estate.

Duncan persuaded some investors to dump their retirement savings into The Duncan Group and gave them fake promissory notes in return; never told investors that The Duncan Group had not bought enough property to justify the promised returns or that he was using the new investors' money to pay sham profits to older investors; and never told them he was using their investments for his personal use, court papers state.

In October 2008, Duncan told investors that the losses were due to the economy and that he was declaring personal bankruptcy.

If convicted, Duncan faces up to 20 years in prison and fines up to $250,000 for each count of mail fraud and wire fraud, and 10 years and $250,000 in fines for each count of money laundering.

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