Houston, TX – Woodlands-based Kenneth Alfred Scudder was sentenced to 53 months in federal prison for running a Ponzi real estate scheme, according to the U.S. Attorney’s Office in
Houston. The scheme conned more than $5 million out of 30 individuals, many of whom were present at the Monday, March 12 sentencing.
Five of Scudder’s victims testified in court, detailing how Scudder’s actions had caused them anguish and financial loss. Scudder was taken into federal custody pending his lodgement in a Bureau of Prisons facility.
Between 2005 and October 2010, according to an FBI investigation, Scudder raised more than $11 million from 45 victims, purportedly for the purchase, renovation, sale or rental of various properties, says the press release from the Attorney’s Office in Houston. The investors were given the impression they would receive a half-share in the sale or rental proceeds from these properties.
Actually, however, these funds were used to pay older investors their supposed share out of properties he allegedly purchased – in fact Scudder did not buy any of this real estate, but only forged various documents to mislead his victims, according to the release.
These fabricated documents were intended to lead investors to believe they had legitimately invested in real estate properties on a fifty per cent sharing basis with Scudder, who took care to use real addresses on these papers, as investors could drive down to these properties, mostly located in Houston.
According to the press release, about $5.2 million was lost out of the $11 million Scudder raised from his victims. Investors’ money was used to make payments for 15 articles of jewelry, mortgage payments on Scudder’s personal residence, purchase of a condo in Galveston and a 50 percent interest in 12 properties jointly with two other persons, but for Scudder’s personal benefit, as per the press release.
District Judge Lynn N. Hughes set a hearing date for March 13 regarding the forfeiture of the jewelry and 12 properties co-owned by Scudder.