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Trib on Hernandez "The Fugitive" version
https://mail.chicagofanatics.com/viewtopic.php?f=156&t=33763		 Page 1 of 1
Author:  Kishin Shinoyama [ Thu Jun 18, 2009 5:14 am ]
Post subject:  Trib on Hernandez "The Fugitive" version
Web sports radio backer now a fugitive
David Hernandez accused of mail fraud in criminal complaint
By Ameet Sachdev | Tribune reporter |June 18, 2009

David Hernandez went from a missing person police were looking for to a fugitive sought Wednesday by the FBI.

Federal authorities obtained a warrant for his arrest on charges he operated a Ponzi scheme that helped bankroll an Internet radio station started by Chicago radio personality Mike North.

Hernandez, 48, who lives in Downers Grove, remained at large as of late Wednesday, said a spokesman for the FBI's Chicago office. Hernandez was reported missing by his wife on Monday evening. Downers Grove police began looking for him after his wife said she was concerned about his well-being.

One of his attorneys called the Tribune on Wednesday morning to report that Hernandez had called her office and said he was in a Downers Grove hotel. When police were informed of his possible whereabouts by the Tribune, a police spokesman said, "We don't think for one second he was in Downers Grove."

Hernandez's disappearance prompted the FBI and U.S. attorney's office in Chicago to quickly file a criminal complaint Wednesday so they could get an arrest warrant from a federal judge. The FBI on Friday searched the Chicago offices of two of Hernandez's businesses.

The criminal complaint charges Hernandez with mail fraud. Details in the complaint, based on an FBI agent's sworn affidavit, closely echo the allegations in a civil lawsuit brought Monday by the Securities and Exchange Commission against Hernandez and the companies he controls.

Hernandez is accused of diverting at least $11 million he raised from investors starting in February 2008 for a purported payday-loan business. Instead, he is accused of using the money for personal expenses and to fund other ventures, including Chicago Sports Webio, North's brainchild. He allegedly sold "guaranteed investment contracts" through NextStep Financial Services Inc. that promised rates of return of 10 percent to 16 percent per month.

The FBI interviewed several investors who were not named in the complaint. They invested amounts ranging from $45,000 to $156,000.

The affidavit states that a review of bank accounts held by Hernandez's companies at Orland Park-based Marquette Bank is "consistent with the operation of a Ponzi scheme." For example, during the last six months deposits into the NextStep Medical Staffing and NextStep Holdings accounts consist solely of checks made payable by individuals to NextStep Financial Services or to Hernandez in amounts totaling more than $5 million, the affidavit said.

Deposits from investors were "frequently followed by issuance of checks payable to a variety of individuals who previously provided funds to Hernandez and NextStep," the affidavit said. The FBI agent said there were no significant deposits from any source that would indicate NextStep Financial Services was earning investment returns of any sort.

The affidavit also hinted that NextStep investors seeking return of their money might be out of luck. As of May 29, the balance of accounts maintained by Hernandez at Marquette Bank was $67,000.
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