Investment fraud

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By BEN NUCKOLS, Associated Press Writer
Wed Jan 2, 11:31 PM ET



BALTIMORE - A man who served prison time for fraud admitted Wednesday that he returned to his old ways after his release, bilking more than 900 investors — including Hurricane Katrina victims — out of $8 million.

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David McDowell Robinson, 57, pleaded guilty to 27 counts of wire fraud and mail fraud before jury selection was to begin for his trial. Authorities said he spent $600,000 of his investors' money on items including luxury cars, housing costs and jewelry and furs for a girlfriend.

"This case demonstrates how important it is for people to be cautious about investment proposals that sound too good to be true," U.S. Attorney Rod J. Rosenstein said.

Robinson's attorney, Ronald Kurland, did not return a call seeking comment.

Robinson pleaded guilty in 1996 to mail fraud charges stemming from three schemes and was sentenced to eight years and 10 months in federal prison. He also served prison time following convictions in state court in 1989.

After he was released from prison in April 2003, he launched his new company, Liberty Trade International Inc.

The company solicited investments of as much as $10,000 and promised returns as high as 30 percent, saying it would provide short-term "gap financing" to home buyers or to people refinancing their homes to generate the returns.

Robinson instead paid investors with funds received by other investors, creating a classic Ponzi scheme. A Ponzi scheme is when an initial group of investors get huge returns and promote the investment opportunity to others, whose investments allow the extraordinary returns to continue to be paid until the scheme collapses.

According to an indictment, Robinson sent an employee to Gulfport, Miss., to make a presentation to investors in January 2006, and his company received about $80,000 in investments.

Robinson also falsely claimed that he has a doctorate, that he was a licensed attorney and that he had over 30 years' experience in real estate transactions, authorities said. He did not mention his convictions or prison time in company materials.

Robinson faces a maximum sentence of 20 years in prison and a $1 million fine on each of the 27 fraud counts. A sentencing date has not been scheduled.