- Associated Press - Friday, July 25, 2014

CHARLOTTE, N.C. (AP) - A man accused of running a Ponzi scheme that bilked about 25 Charlotte investors out of more than $2.5 million has pleaded guilty to securities fraud.

U.S. Attorney Anne Tompkins said Claude Darrell McDougal, 55, pleaded guilty in U.S. District Court to charges of orchestrating the scheme between 2006 and 2010. McDougal faces up to 20 years in prison and a $5 million fine when he is sentenced later.

Prosecutors said McDougal’s clients thought their money would be invested in securities offered by Charlotte-based US Financial Alliance Consultants LLC, which McDougal created in 2005.

Court records show the company was never registered as a securities broker. It guaranteed a rate of return of 6 percent to 15 percent annually.

Prosecutors said McDougal invested only $580,000 of investors’ money and paid them $450,000. The payouts were actually funds from new investors, not profits generated from investments, prosecutors said.

They said McDougal admitted using more than $1 million of investors’ money for dinners, jewelry, electronics, hotel stays, furniture and business expenses.

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