BULLETIN: CFTC Shuts Down Alleged Ponzi Scheme That Pitched Itself On YouTube; Ronald W. Smith Jr. Charged With Operating Forex Fraud; Judge Orders Video To Be Preserved
Ronald W. Smith used YouTube to promote a Ponzi scheme, according to CFTC.
In a case that may spread a chill among fraudsters who use YouTube to promote bogus money-making schemes, the Commodity Futures Trading Commission (CFTC) has charged a Virginia man with fraud.
Ronald W. Smith Jr. of Vansant used a YouTube video to promote a Forex Ponzi scheme that gathered more than $800,000 from 34 investors, CFTC said. In the video, Smith claimed that more than 95 percent of his trades in the “Safeguard 3030 Investment Club” were winning trades and that Safeguard “made a whopping 298 percent in just a mere 17 trading days.”
The CFTC transcribed the YouTube video and presented it and other investigative materials to a federal judge, who ordered Smith’s assets to be frozen, as well as the assets of Smith’s wife, Angela Smith, and the assets of a company known as Tigre Systems Inc.
In reality, “Smith used little, if any, of the funds to trade forex,” CFTC said. “Instead, he used customer funds for personal expenses, such as for a pool service, carpeting and furniture.”
Customer funds also were used for “purported profit payouts” and for business expenses, CFTC said.
At least one “third party solicitor or marketer” helped Smith sell the scheme, which operated between January 2009 and December 2009, CFTC said. The unnamed person who assisted Smith received more than $157,000.
Smith also marketed the scheme in Florida, CFTC said.
Investors’ money was used for personal purchases such as eyewear, clothing, roofing, flooring, furniture and swimming-pool expenses. It also was used for purported business expenses such as payments for hotels, a car and a limousine service.
Smith issued false account statements, which prompted some customers to give him more money, CFTC said.
The scheme began to collapse in October 2009, and Smith told customers he could not pay them because of a “purported on-going investigation by the SEC,” CFTC said.
That claim was false, CFTC said.
In December, Smith told customers he had been cleared of any wrongdoing in the “purported” SEC probe.
That claim was false, CFTC said.
In January 2010, CFTC said, Smith told customers their payments were being held up by a bank.
That claim, too, was false, CFTC said.
Smith had never been registered with CFTC in any capacity, the agency said.
U.S. District Judge James P. Jones issued the asset freeze and an order prohibiting the destruction of documents, including the YouTube video and other evidence.
