Texas State Securities Board announces indictment of alleged Ponzi-schemer

ID-100128578A pyramid scheme can be tempting for some investors. Usually there’s a charismatic person who makes the investor think he or she can’t lose, who doesn’t let on that the operation is making money by signing up new people–the kind of investment that always crashes in the end.

The Texas State Securities Board just announced the indictment of an Oklahoma resident who allegedly ran a pyramid scheme based on real estate investments.

Derek A. Nelson was indicted on charges of securities fraud, theft, and money laundering in Collin County State District Court. 

Nelson allegedly raised $11.9 million from U.S. investors who purchased investment contracts, notes, and other securities. He sold and offered for sale unit shares through a series of programs known as the CMHC Investment Program.

Nelson allegedly failed to tell investors that CMHC was not making sufficient profits from buying, rehabilitating, renting and selling property to make monthly payments to them, that some of the profits and early payments came from other investors or that investors’ funds were being used to pay for his personal expenses.