Johnson County fraudster gets long prison sentence for cheating investors out of millions
So brazen was fraudster Phil Hudnall that, four days after pleading guilty to cheating investors out of millions of dollars, the Lenexa man lied to obtain a federal Paycheck Protection Program loan from the same federal government that had charged him with securities fraud.
The government didn’t say how he spent the fraudulently obtained $29,500 in aid money meant to help legitimate businesses survive during the pandemic. But prosecutors cited the PPP scheme as just one example of many crooked deeds to support the stiff prison sentence that Hudnall received Tuesday in a Kansas City courtroom.
The 51-year-old former high school track coach was ordered to serve nearly 10 years in federal prison without chance of parole and to pay $5.3 million in restitution to his nearly three dozen victims.
Judge Roseann Ketchmark also ordered that Hudnall pay a $3.8 million judgment, which represented the proceeds Hudnall received as a result of a criminal scheme in which investors were promised big returns that they never received on the sale of used oil drilling equipment.
Ketchmark also ordered that Hudnall begin serving his 114-month federal prison sentence after completing the nine-year prison term he began serving recently in Colorado for his conviction in a separate securities fraud scheme. His federal sentencing was delayed for months while that case wound through the Colorado court system.
Hudnall’s 45-year-old brother Brian Hudnall was sentenced last fall to three years in federal prison after also pleading guilty to defrauding investors in the same oil equipment scheme..
Prosecutors summed up the complex series of transactions this way in Phil Hudnall’s sentencing memorandum:
“It was a years-long series of deliberate acts designed to take money from victims by preying on their desire for large returns on their investments.”
Prior to the feds filing the case against the two brothers in June 2020, a Kansas City Star investigation chronicled Phil Hudnall’s long career of cheating investors.
Accusations of fraud had been levied against Hudnall again and again over the past decade, but until this case and the one filed in Colorado, all others had been civil matters. Missouri securities regulators sanctioned and levied fines against the one-time track coach at Winnetonka High School in North Kansas City for bilking investors.
The FBI began investigating him in 2019 after receiving a complaint from one of his investors in the scheme to buy, refurbish and resell used oil and gas extraction equipment.
An FBI affidavit alleged that he promised at least a dozen well-off folks in five states big profits if they would help him buy, refurbish and resell used oil and gas extraction equipment. Most if not all never got a nickel of their investments back.
His alleged victims included an Alabama oilman who is out more than $800,000. Another, a farmer in California who got rich growing pistachios in the San Joaquin Valley, is the namesake for the college of agriculture at his alma mater after donating his farm to California State Polytechnic University in Pomona.
According to the Securities and Exchange Commission, which sued Hudnall ahead of the criminal case, Hudnall spent at least $450,000 of what he allegedly stole from investors to support a lavish lifestyle.
He paid $99,000 cash for a luxury sports utility vehicle at Baron BMW in Merriam, and $24,000 on tickets to local sporting events. About $900,000 went for “Ponzi-type payments” to earlier investors who were demanding their money back.
At sentencing, Ketchmark ordered Hudnall to forfeit the BMW and mineral rights he acquired in connection with the scheme.
This story was originally published April 26, 2022 at 3:07 PM.
