CHICAGO—A far north suburban man was charged yesterday with engaging in a ponzi-type fraud scheme, cheating more than two dozen victims of approximately $3.7 million dollars they invested with a trading firm he owned. The defendant, Joseph A. Dawson, was charged with three counts of wire fraud in a criminal information filed yesterday, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. Dawson allegedly misappropriated more than $1 million of investors’ funds for his own benefit and used investors funds to pay promised returns to other investors. He allegedly caused investors to lose a total of approximately $2.8 million.
Dawson, 48, of Fox Lake, will be arraigned at a later date in U.S. District Court. The charges seek forfeiture of $2.8 million, representing the alleged loss to investors.
According to the charges, Dawson was a commodity futures and securities trader who owned an investment fund called the LEAP Fund since about 2001. He also owned Dawson Trading LLC, which operated in Ingleside, Fox Lake and later Lakemoor, and which took over the business and customers of the LEAP Fund in about 2004.
Between 2004 and September 2009, Dawson offered and sold approximately $3.7 million of interest to 26 investors in Dawson Trading’s investments, including former customers of the LEAP Fund. These investments were primarily in the form of promissory notes, which guaranteed the safety of the invested funds and promised to pay a fixed annual return plus as much as 80 percent of any trading profits. Dawson allegedly misrepresented the profitability, safety and use of the funds raised from investors, as well as the status of the investments.
Instead of investing the funds as promised, Dawson used a significant portion for such personal expenses as his residence, the construction of a swimming pool, landscaping and three automobiles. To conceal the fraud to investors, Dawson allegedly lied about the status of their accounts, at least in part by creating and distributing fraudulently inflated periodic account statements.
The government is being represented by Assistant U.S. Attorney Felicia Manno Alesia.
Wire fraud carries a maximum penalty of 20 years in prison and a maximum fine of $250,000 and restitution is mandatory. The court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, however, the court would determine a reasonable sentence to impose under the advisory United States Sentencing Guidelines.
An information contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.