Utah man Matthew Bates pleads guilty in Ponzi scheme with investor losses above $60 million
Matthew Morrison Bates of Lehi, Utah, pleaded guilty to conspiracy to commit wire fraud and money laundering over a Ponzi scheme run through his company, Hedgehog Investments LLC, the US Attorney's Office for the District of Utah said.
The US Attorney's Office for the District of Utah announced on 2 November 2026 that Matthew Morrison Bates, 42, of Lehi, Utah, pleaded guilty to conspiracy to commit wire fraud and money laundering. He was charged by felony information on 30 September 2026.
According to the US Attorney's Office, from about May 2020 to about June 2025 Bates and others ran a Ponzi scheme that sold short-term promissory notes. Investors were told their money would fund "bridge loans" through Hedgehog Investments LLC. No such loans were made, and returns to earlier investors were paid with money from new investors. A Ponzi scheme is a fraud that pays existing investors with new investors' money instead of real profits.
The scheme collected money from hundreds of investors, and investor losses exceeded $60 million. Sentencing is set for 12 January 2027 in Salt Lake City. The Utah Division of Securities and the FBI Salt Lake City Field Office investigated the case.
Why it matters to AML professionals
Ponzi schemes need bank accounts that look like a working investment business. AML professionals can often spot the pattern because money from new investors flows straight out to earlier investors, with little sign of the promised lending or investment activity. A guilty plea that includes money laundering shows prosecutors treating the movement of investor funds as a separate crime.
Red flags in this case
- Incoming investor funds are paid out to other investors instead of being used for the stated lending or investment activity
- An account described as funding loans shows no loan disbursements to borrowers
- Regular fixed payments to many individuals that match promissory note terms rather than business income
- Many retail investors sending funds to a small private company with short-term notes promising steady returns
If this landed in your queue
- Map inflows and outflows to see whether investor payouts are funded by new investor money
- Ask the customer for evidence of the loans or investments the funds supposedly support
- Review the customer's stated business against actual account activity
- File a SAR (suspicious activity report) if the activity matches a Ponzi pattern and the explanation does not hold up
Key terms
- Ponzi scheme
- A fraud that pays returns to existing investors using money from new investors instead of real profits.
- Promissory note
- A written promise to repay a sum of money, often with interest, by a set date.
- Felony information
- A formal criminal charge filed by a prosecutor without a grand jury, often used when a defendant plans to plead guilty.
Interview angle
What account activity would make you suspect a customer is running a Ponzi scheme?
Describe circular flows where new investor deposits fund payouts to earlier investors, with no evidence of the claimed business. Explain how you would request documents, analyse the flows and escalate.
Sources
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