APOLOGISTS INTERRUPTED: Two Court Rulings Show That HYIP Operators, Players Setting Stage For Painful Downfalls, Foreclosures; Woman Loses Home While New Mom Loses Everything
George Hudgins’ Ponzi Leads To Loss Of Woman’s Home
Florida, the state from which numerous Ponzi schemes flow both locally and through offshore channels, is famous for its Homestead Exemption. In essence, Florida is a state that believes your home is your castle. Its laws make it very difficult for a court to take control of a home to protect the interest of creditors who hold judgments against the owner, for example.
But can Florida’s law protect your homestead if you paid for it with proceeds from a Ponzi scheme — even if you had no knowledge of the scheme?
A federal appeals court ruled last week that the answer is no, saying that a home paid off with Ponzi proceeds is a form of unjust enrichment even if the owner did not know that the money used to retire the mortgage was the proceeds of a crime.
At issue in the case was the Naples home of Wendy Silette, who retired her condominium’s mortgage with $328,000 given her by George Hudgins, a con man Silette had met online.
Hudgins was operating a $90 million, HYIP commodities Ponzi scheme for which he now is now serving 121 months in federal prison. He was charged both criminally and civilly. Records show that Hudgins told one whopper after another to get people to trust him, and the court-appointed receiver in the case demanded the return of ill-gotten gains (commissions paid to people who promoted the scheme, Ponzi “profits” paid to investors and gifts of money that flowed from the scheme).
In some ways, the Hudgins case is a typical HYIP story — i.e., family members, friends, promoters, “winners,” recipients of gifts, debtors and even a church that received a gift based on Ponzi proceeds became part of the litigation. In one big way, however, the case is remarkable.
