Defendant In $50 Million Texas Ponzi Taken Into Custody

A previous encounter with the Securities and Exchange Commission and a $50,000 fine did not stop Benny Lee Judah from selling unregistered securities, and now Judah has been taken into federal custody.

Judah, 50, of Lubbock, Texas, pleaded guilty today to one count of money laundering and one count of sale and delivery after sale of unregistered securities. He faces up to 20 years in prison and a fine of up to $250,000 on the money-laundering charge, and up to five years in prison and a $250,000 fine on the count of selling and delivering unregistered securities.

Although his formal sentencing is scheduled later, Judah was taken into immediate custody by federal agents. His company, Excel Lease Fund Inc., already is in receivership. Judah’s assets have been frozen since April, when the SEC sued him for the second time this decade for selling unregistered securities.

Both Judah and Excel were previously sued in 2001. He was fined and put on notice not to break securities laws. In 2005, however, he again began to sell unregistered securities, collecting at least $50 million, but Judah actually was running a Ponzi scheme and lying to investors that his company was profitable, investigators said.

“As part of his scheme, Judah misrepresented the viability of Excel by failing to disclose the true and actual use of investor funds, and the true financial condition of Excel, thus allowing him to conceal, disguise and convert investor monies for unauthorized purposes,” prosecutors said. “He generated false documents consisting of prospectuses, balance sheets, income statements and interest accrual letters that were represented to be true in order to perpetuate the image of a successful company. He mailed these fraudulent documents to investors and received approximately $50,162,707. He represented to investors that Excel was profitable, when it was not, and grossly overstated the value and nature of Excel’s assets.”

Restitution in the case was pegged at more than $48 million, according to records.

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