CEO back in U.S. court

Man accused in Ponzi scheme has history of financial crimes

March 03, 2007|By Matthew Dolan | Matthew Dolan,Sun reporter

With degrees from the Gilman School, Cornell University and the University of Maryland School of Law, David McDowell Robinson seemed primed for legitimate success.

Instead, federal prosecutors said this week that the 56-year-old Baltimore CEO orchestrated a complicated $8 million Ponzi scheme that lured in more than 900 investors, including victims of Hurricane Katrina.

It was nothing new, according to state and federal authorities.

Arguing yesterday to keep Robinson behind bars before his trial, Assistant U.S. Attorney Jefferson M. Gray, who prosecuted Robertson in the mid-1990s for similar schemes, called the scope of the alleged financial shenanigans "simply astonishing."

A decade ago, a federal judge who convicted Robinson called him "one of the most pernicious scam artists I've ever heard of."

But the prosecutor's arguments and Robinson's lengthy criminal history were not strong enough to sway a federal magistrate judge yesterday.

Judge Susan K. Gauvey, who called Robinson's past crimes "stunning," ordered that he be released into the custody of his estranged wife. Conditions of his release included electronic monitoring that requires Robinson to remain in his wife's Baltimore home unless he is meeting with his lawyer or going to work.

Gauvey's decision might have been based in part on whether Robinson could be considered a danger under the regulations for federal pretrial detention.

His attorney, assistant federal public defender Joseph L. Evans, argued that being an "economic danger" to the community - the rationale noted by prosecutors - was not one of the criteria listed in the law as a way to keep someone incarcerated before trial.

"He is not someone who is without a support system and friends," Evans added, pointing to a man in the gallery who recently employed Robinson.

But the man, who declined to give his name to a reporter after the hearing, said he was "shocked" by the charges against Robinson and unsure whether he would continue to employ him.

Walking out of court yesterday, Robinson declined to comment.

Robinson's financial crimes stretch back almost two decades, court records show.

He served a year in a work-release program after a 1989 conviction for defrauding businesses of more than $70,000 while he was an official with the Maryland Department of Economic and Employment Development.

In 1996, he was back in court, this time sentenced to eight years and 10 months in federal prison for embezzling more than $500,000 from investors, including a ministers' group.

The Sun reported he had pleaded guilty to the theft of about $410,000 from Financial Diversified Services, an Anne Arundel County investment firm, and The Minister's Roundtable, a nonprofit corporation established by a group of Baltimore ministers.

During a sentencing hearing before U.S. District Judge William M. Nickerson, prosecutors also presented evidence that Robinson stole $150,000 from members of the International Investment Consortium Inc., an investment partnership he formed to buy and renovate decaying housing in Baltimore, according to the article at the time.

In sentencing Robinson, The Sun reported that Nickerson also took into account evidence that he had engaged in other fraud schemes and was convicted of federal mail fraud for accepting a $25,000 payment from an Anne Arundel couple to represent them in challenging a tax assessment before the U.S. Tax Court in Washington.

Nickerson also sentenced him to three years of supervised release after he has served his term.

It was during the supervised release that Robinson illegally traveled to Georgia and opened new bank accounts without permission, according to records of his 2006 conviction.

According to the new 19-count indictment unsealed this week, Robinson took his schemes across the country.

He was the sole shareholder, president and chief executive officer of Liberty Trade International Inc. from 2004 until last year, court records show.

During that time, Robinson directed all of the company's operations and controlled the company's assets. Liberty Trade solicited investors by offering a number of investment options, including investing $10,000 at a 30 percent rate over 120 days.

Prosecutors said Robinson falsely represented to investors that Liberty Trade would use only secured loans backed by sufficient reserves. Those loans, the company promised, would provide short-term financing to home buyers or persons refinancing their homes to generate the returns necessary to pay the promised rates of interest, according to the indictment.

Instead, the indictment alleged that investors received unsecured and uninsured promissory notes.

Robinson used funds received by his company from investors to pay the promised rates of return in a classic Ponzi style, prosecutors said. Between September 2004 and March 2006, Liberty Trade made $3.6 million in payments to its investors. All the money came from other investors, according to the indictment.

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