BULLETIN: Another Alleged Forex Ponzi Scheme — This One In Texas; CFTC Says Convicted Felon And Known Securities Swindler Ran New Scam By Trading In Accounts In Wife’s Name
A Texas man with federal convictions two decades ago in Utah on charges of securities fraud, mail fraud, making false statements and conspiracy started a Forex Ponzi scheme in 2008 and stole at least $750,000 from investors, according to a CFTC complaint originally filed under seal earlier this month.
U.S. District Judge Richard Schell of the Eastern District of Texas now has frozen the assets of Larry Benny Groover of Gunter, and the seal on the case has been lifted.
Groover, 70, consented to a judgment in a 1986 registration and antifraud case brought by the SEC, and was the recipient of a five-year civil ban in 1987 from associating with a broker, dealer or investment adviser, the CFTC said.
Criminal charges were brought against him in 1989, resulting in his 1991 conviction and a jail sentence of two years, the CFTC said.
His wife, Joanne Groover, has been named a relief defendant in the new CFTC action, and the agency is seeking the return of what it described as ill-gotten gains.
Like her husband, Joanne Groover never has been registered with the CFTC “in any capacity,” the CFTC said.
The agency advised Schell that it believed Larry Groover “needed Mrs. Groover’s name” to open forex trading accounts because of his past encounters with regulators and his prison record.
While on five years’ federal probation after his criminal conviction, Groover’s probation was revoked in 1997 for not making good on a $16,000 restitution order, the CFTC said. Federal records show he was released from prison in 1999.
Investor funds were commingled with the personal funds of both Groover and his wife in Groover’s most recent scam, the CFTC charged.
One of Groover’s customers formed a company and plowed $250,000 into the scheme, the CFTC alleged.
On Aug. 21, 2008, Groover faxed the customer an account statement indicating that the customer’s funds had grown “5% monthly” over a sustained period and that the customer now had a balance of $393,378.09.
“This account statement was completely false,” the CFTC charged. “In reality, in less than a month’s time, Groover lost nearly the full balance of the . . . account trading forex.”
The CFTC charged in the complaint that the customers account actually had incurred “$211,505 in trading losses and $17,226 in fees.”
Some it not “all” of Groover’s customers were not “eligible contract participants” because they lacked sufficient assets, the CFTC alleged.