Texas Man, Duc Nguyen Sentenced for $1.6 Million Investment Fraud Scheme
KC Brothers Also Pleaded Guilty to Fraud Scheme
Duc Nguyen, also known as “Doug,” 58, was sentenced by U.S. District Judge Roseann Ketchmark to five years in federal prison without parole. The court also ordered Nguyen to pay $1,641,000 in forfeiture and restitution.
On July 15, 2021, Nguyen pleaded guilty to one count of wire fraud. Nguyen admitted that he engaged in a fraud scheme from April 2018 to August 2019 in which he proposed an opportunity for high net worth individuals to invest in the purchase, refurbishing, and sale of used oil equipment. He told Phillip Hudnall of Lenexa, Kansas, and his brother, Brian Hudnall, of Kansas City, Missouri, that profit from these transactions would be three to five times the amount of the investment. Brian and Phillip Hudnall raised money from investors based upon these representations from Nguyen.
From April 2018 through June 2019, the Hudnall brothers wire transferred $1,641,000 in 29 separate transactions to two separate accounts controlled by Nguyen. Nguyen admitted that he did not use any of the monies for the purchase, refurbishment, and shipment of used oil equipment. The money from those accounts was traced to hundreds of thousands of dollars in transactions at Las Vegas casinos and for Nguyen’s personal expenses.
Although Phillip and Brian Hudnall were victims of Nguyen’s scheme, they made false representations and defrauded their investors of approximately $4.5 million. They pleaded guilty in June 2020, in separate but related cases, to their roles in the investment fraud scheme. Brian Hudnall was sentenced on Oct. 21, 2021, to three years in federal prison without parole and ordered to pay approximately $4.5 million in restitution. Phillip Hudnall is scheduled to be sentenced on April 26, 2022.
Phillip Hudnall told investors that his company, BirdDog Business Group, LLC, had completed two successful transactions – a $244,000 loan and a $490,000 loan, both of which had been repaid with an interest rate of 30 percent. In fact, no prior completed transactions occurred and no monies were received from the sale of any oil equipment including any principal or interest. To support the false claim, Phillip Hudnall requested that Brian Hudnall create documents as proof of the prior successfully completed transactions. Brian Hudnall wrote two checks on the bank account of his business, DonDon LLC, which was closed. Brian Hudnall also created a fraudulent memorandum to support the false claim.
Phillip Hudnall told investors their funds would be used to purchase specific pieces of oil equipment for refurbishment and resale. Persons invested approximately $3.6 million for the purpose of purchasing specific pieces of oil equipment. Phillip Hudnall and another person also obtained a loan from a bank in Pittsburgh, Pennsylvania, for approximately $1.3 million to finance the oil equipment scheme. Most of the money raised from investors, however, was spent on personal expenses.
These cases are being prosecuted by Assistant U.S. Attorney Paul S. Becker. They were investigated by the FBI and the Securities and Exchange Commission.