Courtesy WGN

(January 29, 2010) A Downers Grove man pleaded guilty Thursday to running an investment scheme that bilked more than 200 people of their savings, which he used to bankroll a now-defunct Chicago sports-talk radio station and other personal purchases.

In his guilty plea to a mail fraud count, David Hernandez admitted that he swindled investors of about $6.3 million. The loss is 80 percent more than $3.5 million loss federal prosecutors had accused Hernandez of stealing in an indictment brought against him in July.

Further investigation of Hernandez's investment fraud found more losses, Assistant U.S. Attorney Brian Hayes said after the hearing.

Other than to enter his plea, Hernandez, 49, did not say anything about his crime or his victims when he appeared in a federal courtroom in Chicago. He and his lawyer also declined to comment after the hearing.

Between July 2007 and May 2009, Hernandez lured more than 300 individuals to invest about $13 million with NextStep Financial Services, a company that he fraudulently said invested in payday loan products. He promised monthly returns of 10 percent to 16 percent.

Instead, he used the funds to make "Ponzi-style" interest payments to investors, according to the plea agreement. Hernandez also diverted money to Chicago Sports Webio, an Internet-based radio station launched by Chicago sports radio personality Mike North.

When securities regulators raided NextStep's office in June, the radio station abruptly shut down. Hernandez also fled the Chicago area. He was arrested a few days later in Normal, Ill., after he attempted suicide.

Hernandez is free on bond pending his sentencing. Hernandez could go to prison for between 11 years and three months and 14 years, according to the prosecutor's interpretation of federal sentencing guidelines.

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