Retired drug rep ran Ponzi scheme - The State Journal-Register

Retired pharmaceutical salesman James U. Dodge took money from both friends and strangers “with a smile and a pat on the back,” according to a man who lost half his savings in Dodge’s Ponzi scheme.

Dodge, 72, was sentenced to five years and three months in federal prison Tuesday after pleading guilty to mail fraud and money laundering in September.

U.S. District Judge Richard Mills, in sentencing Dodge to terms agreed upon by both parties, called Dodge’s scheme “absolutely despicable.”

“Everyone here would like to have you drawn and quartered, and in the old days that might have happened,” Mills said. “You took these good people to the cleaners. You are just like a highwayman who pulled a pistol.

“There are plenty of people involved here who are not sophisticated investors,” Mills said. “They’re little people.”

Dodge, of the 4800 block of Johanne Court, used money given to him by later investors to pay fictitious returns promised to earlier investors.

He told people who invested with him that he was a day trader whose “algorithm” system allowed him to guarantee investment returns of at least 6 percent per month. He said he would split his profit with investors and that they would receive payments of 3 percent of their investment each month — 36 percent annually.

 

Lost $1.79 million

Some of the investors defrauded by the scheme took monthly checks, while others rolled over their false returns.

Assistant U.S. attorney Patrick Hansen put the investor loss at $1.79 million, and Mills ordered restitution in that amount.

Hansen said a total of 66 people invested with Dodge, 52 of whom lost money.

Five investors who profited from the scheme have returned to the government $32,500 in profits. That will be added to Dodge’s bond to bring the restitution pool so far to $35,396, he said.

Hansen said the government is still seeking money from those who profited from the scheme.

“We will take every legal recourse we can to recover that money,” he said.

Springfield physician Brian Moore told Mills that Dodge is a danger to the public and should be incarcerated for as long as possible.

“You knew me for years before you victimized me,” Moore said to Dodge. “You had coffee and joked with me every Saturday morning. When the time was right, you stripped me of half my savings.”

 

‘A scoundrel’

Moore added that he believes Dodge’s son, James W. Dodge, was the beneficiary of some of his father’s profits. Part of the money was spent to send Dodge’s grandson to a private school out of state, Moore said.

“An honorable man would have insisted that his grandson be pulled from that school in order to provide some restitution to victims, but you are not an honorable man,” Moore told Dodge. “You are a scoundrel.”

In a sense, Moore added, no victim has been hurt worse than Dodge’s grandson.

“He’ll have to live with that name for the rest of his life. This is your legacy,” Moore told Dodge.

David Herst, 61, appeared before the court in a wheelchair. He said he lives on Social Security disability benefits and invested with Dodge on the recommendation of a friend -- who also lost money.

“That money was all I had,” he said. “I had some travel plans, and I wanted help my daughter and provide an education for my granddaughter.

“But it’s too late for that. I can only go forward,” Herst said.

Other victims testified that they have had to return to work after retiring or that their children can no longer attend the schools they would like because they no longer can afford it.

“These people were victimized beyond the money,” Hansen said. “He cheated friends and strangers alike. He invited or worked his way into their homes and then stole from them.”

 

Dodge delusional?

Mills told Dodge he’d have to face his victims and apologize.

“You certainly have my apologies from the bottom of my heart,” Dodge said.

James W. Dodge said in a letter to the court that his father “suffers from great delusions of grandeur.”

He wrote that his father, who is divorced, found that, as he got older, he was free to do what he wanted.

“To the fore came a mental imbalance that is not reality based,” the younger Dodge wrote. “This always at base restless, unfulfilled, manipulative opportunist was convinced there was a pot of gold available to him.”

“Now if he were to obtain this pot of gold, he would make everyone whole and give, give, give as he gave to me, my wife and son during this scheme,” James W. Dodge wrote.

Mills ordered Dodge to pay at least 50 percent of his disposable income each month in restitution after his prison sentence ends. Dodge also is to serve six years on mandatory supervised release.

Chris Dettro can be reached at 788-1510.

 

Background: James U. Dodge

From at least June 2004 through last April, James U. Dodge, now 72, defrauded 52 investors of $1.79 million in a scheme in which he used money from more recent “investors” to pay earlier investors.

Even after agents searched his home in February 2010, authorities say the retired pharmaceutical salesman continued to mislead investors.

Dodge claimed to have a system that guaranteed investment profits, but he actually had substantial losses on investments he did make, an affidavit filed in connection with his arrest said. However, he also allegedly spent investors' money on personal expenses – among them his rent, to buy a car each year, on an annual month-long vacation in Naples, Fla., and for his grandson's tuition at a boarding school.

Dodge pleaded guilty Sept. 2 to mail fraud and money laundering.

via sj-r.com

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