On Wednesday, July 15, 2009, Timothy Liam Epstein, Chair of the firm's Sports Law Practice Group, appeared on Good Day Chicago. During the morning program, airing on Fox Chicago, Tim discussed the Ponzi scheme associated with Mike North’s Chicago Sports Webio, an internet radio site for Chicago sports. Hernandez's NextStep company offered financial investment services to people (“Guaranteed Investment Contract”) and gave investors false hope of their investments (returns of 10-16 percent per month, no loss to principal). David Hernandez, co-founder of Chicago Sports Webio, used investments for himself and to make Ponzi “interest” payments to other NextStep investors. This operation (July 2007 – June 12, 2009) caused $3.5 million in losses. Sometime in the late spring, the SEC began an investigation, followed by a civil lawsuit. The FBI also began a criminal investigation in the late spring for mail fraud, raiding Hernandez's office in June, and indicting him on four counts of mail fraud last week. Each count of mail fraud has a maximum penalty of 20 years and a $250K fine, or twice the gain or loss. It is also thought that Hernandez may have used proceeds from the Ponzi scheme to sponsor Mike North's show "Monsters in the Morning" with Dan Jiggets on Comcast SportsNet Chicago and to fund the Internet sports talk radio site. North denies knowledge of the scheme.
Please click here to view Timothy's segment.
For more information on this matter, or any sports law matter, please contact Timothy Epstein at 312.894.3227.