Jun 22, 2009 6:42 pm US/Central
Webio Founder In Custody After Federal Charges
CHICAGO (AP) ―
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David Hernandez, the money man behind Mike North's Chicago Sports Webio accused of running a Ponzi scheme, has contacted his family after being reported missing.
Downers Grove Police
A fugitive financier who helped launch a Chicago sports Web site and was charged in what prosecutors describe as an $11 million Ponzi scheme was captured Monday in central Illinois, police said.
David Hernandez, 48, of Downers Grove, was found in a hotel guest room in Normal and taken to a hospital there "where he is receiving treatment for what appear to be self-inflicted injuries," Normal Police said in a statement.
Officers were called to the hotel at about 10:50 a.m. "to check the welfare of a patron," police said.
Hernandez was being held in Normal on a federal mail fraud warrant until he can be transferred to federal custody, police said.
Hernandez was a key figure in launching "Chicago Sports Webio," an Internet radio site that presents sports figures and reporters and which featured Chicago sports commentator Mike North.
Federal prosecutors charged Hernandez last week with using several companies to operate a Ponzi scheme in which investors contacted over the Internet were misled about the investments he was selling. Assistant U.S. Attorney Brian Hayes, who is prosecuting the case, said he is not aware of Hernandez retaining an attorney.
Ponzi scheme operators promise big returns but actually pay investors not out of money the venture has made but with money from other investors.
The U.S. Securities and Exchange Commission also has filed a civil lawsuit in the case, accusing Hernandez of promising investors in Next Step Financial returns of 10 percent to 16 percent.
The complaint said that beginning in February 2008, Hernandez solicited funds from at least 100 investors in at least 12 states through Next Step Financial Services. It said he misrepresented the company as a successful business that invested in payday loan stores when in fact it was out of business. It also said he lied to investors when he said their investments were insured.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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