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Tag: U.S. District Judge Barbara M. G. Lynn

  • URGENT >> BULLETIN >> MOVING: In Separate Cases, Federal Judges Issue Orders To Halt Alleged Forex Fraud Schemes In Texas And Colorado; CFTC Says 1 Case Involves Bogus Miracle Robot And Bogus Utah Office, The Other Involves A Straight Ponzi Targeted At People Of Faith

    EDITOR’S NOTE: Although not reflected in the headline above, one of the alleged scammers referenced in a new case below — Nicholas Trimble of Colorado — is alleged to have targeted an alleged scammer in a months-old case: Jeffery Groendyke of Michigan. Details below.)

    URGENT >> BULLETIN >> MOVING: In Colorado, U.S. District Judge Philip A. Brimmer has frozen the assets of Nicholas Trimble, Capstone FX Quantitative Analysis Inc. and Beekeepers Fund Capital Management LLC amid allegations they were conducting a Forex fraud involving a purported “automated forex robot trading system” known as the “Gladiator system.”

    Separately, U.S. District Judge Barbara M. G. Lynn of the Northern District of Texas has frozen the assets of Rodney Wagner, Roger Wagner and GID Group Inc. amid allegations they were running a $5.5 million Forex Ponzi scheme. The Wagners live in Grand Prairie, Texas, and are brothers.

    Both the Texas and the Colorado cases were brought by the CFTC. Like many recent fraud cases, the allegations are alarming.

    In the Colorado case, for instance, it is alleged that Trimble buffaloed investors by telling them his miracle system had been created by a former NASA computer programmer, was a “machine that prints money” and would create a “billion dollar fund” — and had fetched a purchase offer of $20 million.

    Trimble told investors he rejected the offer “because the system was too valuable,” the CFTC said.

    But that was just one series of lies, the agency said. In reality, Trimble, 29, of Denver, was spending investors’ money at Las Vegas casinos, making large cash withdrawals and giving money to his wife and a lawyer.

    Meanwhile, he scammed accused Forex scammer Jeffery Groendyke of Michigan out of at least $407,000, according to court filings. (In the Groendyke case, which was filed in Michigan in May, Groendyke was accused of targeting people of faith in his scam.)

    As part of Trimble’s fraud, Trimble fabricated a Utah office and told an investor that miracle programmers worked at the Utah office. When the investor wanted to see the office, Trimble arranged a “webinar” instead, the CFTC charged.

    During the webinar, someone using the name of “Josh Christensen” is alleged to have “pretended to be the head technology person at Capstone’s office in Utah.”

    In the Texas case, the Wagner brothers and GID Group are accused of targeting people of faith in a virtually pure Ponzi in which at least $5.5 million was collected from 99 people.

    “[T]he Wagner brothers concealed and/or perpetuated their fraud by making weekly payouts of ‘returns’ knowing that in fact GID had obtained no profits through forex trading,” the CFTC charged.

    Among other things, the CFTC charged, the offering materials claimed “Time is of the essence (sic) by signing this document first party agrees to wire funds within twenty four hrs so funds may be invested as soon as possible to insure maximum returns.”

    The “payout schedules that each the Wagner brothers delivered to prospective customers promised at least a 200% return on their principal, to be paid over 15, 20, or 40 weeks,” the CFTC charged. “The agreement stated that ‘All amounts are based on five days of trading.’ Both Wagner brothers delivered the agreements, with attachments, to actual and prospective customers via email.”

     

  • CFTC Revokes Registrations Of 2 Texas Firms That Operated Forex Ponzi Scheme Targeted At Elderly Churchgoers And Others In At Least 4 States; Firms Used ‘Charts’ Showing Magnificent Earnings And Cherry-Picked Name Of Warren Buffett For Fraud Pitch

    SCREEN SHOT OF SECTION OF OCT. 25, 2010, FINDINGS OF FACT: M25 and M37 used a "chart" projecting magnificent earnings and encouraged investors to roll over their returns by plying them with a purported "renewal bonus." After 11 years, $100,000 would turn into $1 million, according to the firms' claims. The firms also claimed they outperformed legendary investor Warren Buffett, according to uncontested findings of fact by U.S. District Judge Barbara M. G. Lynn. It is common in online fraud schemes for pitchmen to use charts and spreadsheets that promise spectacular returns. It also is common for scammers to trade on the name of Warren Buffett or other well-known business titans as a means showing off, sanitizing fraud schemes and gaining "legitimacy" by osmosis. (Red Emphasis added by PP Blog.)

    EDITOR’S NOTE: The cases against M25 Investments Inc. (M25) and M37 Investments LLC (M37) include elements that are common in online fraud schemes. For starters, the offers were targeted at senior citizens and people of faith. Moreover, the firms relied on PowerPoint presentations and charts that wowed victims with tales of fantastic earnings. The fraud schemes also traded on the name of a celebrity — in this case, famed investor Warren Buffett.

    Much of the information in the story below comes from uncontested findings of fact by a federal judge. Taken line by line, the CFTC’s allegations upon which the judicial findings were based paint a picture of the sort of fraudulent sales pitches that occur daily on the Ponzi forums and personal websites of hucksters. Spreadsheets that show fabulous earnings projections are in common use in the universe of fraudsters, for instance. So is the use of the name of a celebrity or famous company to sanitize a scheme and disarm skeptics.

    And appeals to faith are used daily online to separate Believers from their money.

    Even as this story is being published, members of Club Asteria are doing the sorts of things that led to a two-year legal quagmire for M25 and M37, a litigation nightmare the firms brought on themselves by relying on cheerleaders to drive business, engaging in affinity fraud and then trying to cover it up, according to court filings.

    Club Asteria members, for example, are using spreadsheets and earnings charts to lure prospects. Meanwhile, they’re trading on the name of the World Bank, citing guaranteed earnings, mixing in appeals to charity and using religious imagery to drive business to the Virginia-based firm . . .

    Two Texas firms that targeted a Forex Ponzi scheme at elderly people of faith and others in at least four states have had their registrations revoked by the Commodity Futures Trading Commission.

    The revocations against M25 Investments Inc. (M25) and M37 Investments LLC (M37) of Waxahachie mean that the firms no longer are registered Commodity Trading Advisors. CFTC’s issuance of the revocations follows on the heels of an administrative action the agency filed in February. The CFTC also sued the firms in federal court two years ago, gaining restitution and penalties of more than $16 million.

    An administrative law judge found the firms “unfit for registration” last month. Neither firm contested the administrative action.

    On Oct. 25, 2010, U.S. District Judge Barbara M. G. Lynn found that the firms operated a Ponzi scheme that gained a head of steam by luring customers with promissory notes that guaranteed interest payments of 2 percent a month or 24 percent a year.

    Neither M25 nor M37 contested the findings. Both firms agreed to an issuance of a consent order with specified penalties and a demand for restitution. The firms neither admitted nor denied the allegations.

    Business was solicited online and through word-of-mouth, and clients often did not even know the difference between the two firms, Lynn ruled.

    “Some or all” of the firms’ customers were unqualified investors who did not have the required millions of dollars of assets to become an “eligible contract participant,” the judge ruled.

    Sales pitches for both firms claimed the ability to outperform famed investor Warren Buffett while making ancillary claims the companies could turn $100,000 into $1 million if customers stayed with them for 11 years and plowed their interest payments and annual renewal bonuses of 2 percent back into the companies.

    The scheme gathered about $8 million from about 213 customers, the judge ruled, noting that company “representatives” solicited business after church services and in customers’ homes.

    On March 31, 2009, according to the judge’s uncontested findings of fact, the firms owed customers $7.6 million but had only $3.9 million in total assets. Investors were shielded from the news and issued false account statements showing gains.