Hill Williams Income Funds Ponzi Scheme - Notorious Frauds and Schemes

What Went Wrong?

Starting out as a legitimate enterprise, the Hill Williams Income Funds were set up as a means of raising capital for real estate development. Over four years, the owner established four funds which allowed him to raise $89 million by offering limited partnerships to the general public.

The Funds were not conceived in fraud but after about two years they were clearly a failing venture. It was at that time when he began soliciting investors for Fund IV while diverting new funds to earlier investors in order to lull them into a false sense of security. By using new monies to pay old costs and interest payments to prior investors, he converted his real estate venture into a classic Ponzi scheme.

"It is a common misperception that only the gullible are defrauded in bogus ponzi schemes," said United States Attorney Nora Manella. "In this case, the victims invested in what was originally a legitimate scheme. They were defrauded only when he decided that being a con man was preferable to being a failed businessman."

"The hallmark of a successful investment scheme is the appearance of legitimacy", Manella added. Precisely because this real estate venture began as a legitimate enterprise, he was later able to lull and deceive thousands of prior and prospective investors.

He sustained his scheme by regularly sending mailings to existing and prospective investors and by meeting with them on frequent bus tours. In those meetings and through the mailings, he comforted investors by creating an illusion that new projects had been successfully funded.

In fact, he was misappropriating millions of dollars while running his company at near deficit levels. His Ponzi scheme finally collapsed when the funds were forced into bankruptcy.

In a plea agreement he plead guilty to the mail fraud charges and agreed to pay approximately $30.5 million restitution to approximately 2,500 investors duped in the scheme.