HOUSTON (CN) - A Ponzi man who defrauded his victims of $11 million by claiming they would get half-interest in homes he bought was sentenced to 53 months in federal prison.
Kenneth Scudder induced 45 people to hand him more than $11 million, claiming he would use the money to buy homes, fix them up and rent or sell them, the U.S. Attorney's Office said in a statement.
"Scudder told investors they would receive 50 percent ownership in the sale of the properties or they would receive 50 percent of the rent from the properties," prosecutors said. "In reality, Scudder used new investors' money to pay older investors for the alleged sale or rent from the real estate he allegedly purchased. However, during the course of the scheme, Scudder never purchased any of the real estate he said he did."
Scudder ran the scam from 2005 to 2010, prosecutors said.
"To further the scheme, Scudder created documents that purportedly showed an investor's ownership interest in the real estate properties," the U.S. Attorney's statement said. "The documents indicated the alleged properties would be purchased by Scudder with the investor and Scudder each owning 50 percent in the property. "To mislead investors, Scudder used real addresses for the properties he claimed to have purchased and investors could drive to the address and see the properties, which were located throughout the Houston area."
Scudder, 56, of The Woodlands, also told investors, falsely, that he owned a Taco Bell in The Woodlands, and they could buy a share of it, prosecutors said.
Scudder used his victims' money to buy a condo in Galveston, 15 pieces of jewelry and to pay the mortgage on his home in The Woodlands, prosecutors said.
Scudder, who handed out $5.2 million in Ponzi payments, was taken into custody at his sentencing hearing Monday, prosecutors said.
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