But the hedge fund Stuart J. Pippin operated never conducted any trading. It didn't even have a trading account.
None of that ever was shared with the investors some from San Antonio who gave Pippin nearly $2 million for a so-called commodity trading pool. Pippin, 60, falsely claimed that trading by his company, Pippin Investments, had increased their pooled investments to more than $4 million.
Court documents said that, between June 2004 and August 2005, Pippin lived in San Antonio and sent false monthly account status reports to investors purportedly showing earnings.
The records also show that Pippin paid some pool participants with funds from other participants, not from profits or dividends an illegal plan known as a Ponzi scheme.
After being confronted by the U.S. Commodities Futures Trading Commission, which regulates the commodities markets, and later the FBI, Pippin admitted that his tactics were a fraud.
Among Pippin's victims were friends and relatives including Pippin's brother, Fred and people who were referred to Pippin by word of mouth. Some had invested their kids' college funds. Pippin advised some investors that because their investments had grown so much, they could buy cars or other items, said San Antonio dentist Randall Voigt, who was Pippin's brother-in-law at the time.
He was very vague about (the investments), said Voigt, who invested $750,000 he saved partly by liquidating his former dental practice, which he had closed because of an injury. He put on a good show, but he could never really show you exactly what he was doing.
The commission sued Pippin in 2005 in New York, a civil case that ended in May 2006 with orders that he pay $1.68 million in restitution. He also agreed to a $106,500 civil penalty.
Voigt said most of the investors got about 90 percent of their money back.
He went to the FBI, which got a criminal indictment against Pippin in 2008. Pippin pleaded guilty last year to a count of wire fraud.
During Pippin's sentencing today, U.S. District Judge Xavier Rodriguez will decide between two possible prison terms 63 to 78 months, or a much lower term of 21 to 27 months.
Assistant federal public defender Alfredo Villarreal is arguing for the lower range. In a court motion, Villarreal claims the actual loss, after most of the money was recovered, is $91,160.
The intended loss, the commission and federal prosecutors contend, was $1.68 million, which kicks in the tougher sentence.
He did more than steal people's money, Voigt said. He meddled with their lives.