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Fox Lake man charged in $3.7 million Ponzi scheme
By Lee Filas | Daily Herald Staff
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Published: 8/17/2010 4:14 PM

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A Fox Lake man is accused of cheating more than two dozen victims out of approximately $3.7 million dollars in a Ponzi scheme he has run since 2004, officials announced Tuesday.

Joseph A. Dawson, 48, is charged with three counts of wire fraud, according to the news release issued by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois.

Authorities say Dawson misappropriated more than $1 million in investors' funds for his own benefit, using the money to purchase his home, landscaping and three automobiles, and the construction of a swimming pool. He then used other investment funds to cover the money he spent, officials said in the release.

Dawson was a commodity futures and securities trader who owned an investment fund called the LEAP Fund since about 2001, officials said. He also owned Dawson Trading LLC, which operated in Ingleside, Fox Lake and Lakemoor, and took over the Leap Fund in 2004, officials said.

The 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, the release states.

Throughout the term of the note, Dawson misrepresented the profitability, safety and use of the funds raised from investors, as well as the status of the investments, according to the release. And, instead of investing the funds as promised, he used a significant portion for his personal expenses.

To conceal the fraud to investors, Dawson lied about the status of their accounts, at least in part by creating and distributing fraudulently inflated periodic account statements, authorities said in the release.

He will be arraigned in U.S. District Court. The charges seek the forfeiture of $2.8 million, equal to the alleged loss to investors.

Wire fraud carries a maximum penalty of 20 years in prison and a maximum fine of $250,000. Restitution is also mandatory if he is found guilty of the charge.