A Clinton Township, Mich., man has pleaded guilty to defrauding 750 clients and losing $34 million of their funds, which he put in high-risk investments without their permission.
Alan James Watson, 46, pleaded guilt to one count of wire fraud and faces up to 20 years in prison when he is sentenced in December, according to authorities. He solicited money from people across the nation from 2006 to 2009, saying he was investing in an equities trading system developed by an expert consultant with a promised return of 10% a month. Almost all of the money was invested in high-risk investments that resulted in a loss of $34 million, said U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.
To create the illusion that his investments were profitable, Watson issued false monthly account statements showing net gains from the investments, and used money from new investors to pay earlier investors, prosecutors said.
"A.J. Watson took huge risks with others' money and lost big," MacBride said. "He covered up his massive losses through lies and deceit to members of his investment club, many of whom have now lost everything."
"Mr. Watson used his investment club to cheat people who trusted him out of their savings," MacBride added. "More than 750 unwitting victims thought they had done their homework and calculated their investment wisely; instead they were met with false documentation that yielded no return."
The Commodity Futures Trading Commission has filed a related civil case in the Eastern District of Michigan.
-Karen DeMasters