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Tag: CFTC

  • Firm In Which TelexFree Figure Faith Sloan Allegedly Hid Money Charged With Fraud In Separate Case

    After the SEC's TelexFree case in 2014, Faith Sloan allegedly sent money to Changes Worldwide, a firm bow charged with fraud by the CFTC,
    After the SEC’s TelexFree case in 2014, Faith Sloan allegedly sent money to Changes Worldwide, a firm now charged with fraud by the CFTC. From: federal court files.

     

    UPDATED 12:14 P.M. EDT U.S.A. Back in April 2014, the SEC charged online huckster Faith Sloan with fraud for pushing the TelexFree scheme. Two month later, in June 2014, the SEC accused Sloan of violating the TelexFree asset freeze by sending nearly $15,000 to an online scheme known as Changes Worldwide LLC for the purchase of “business promo packs.”

    She also was accused of violating the freeze by sending $3,990 to an entity known as Changes Trading. There has been concern for years about serial MLM HYIP participants proceeding from fraud scheme to fraud scheme to fraud scheme. This sometimes is described as “whack-a-mole.”

    Now, the U.S. Commodity Futures Trading Commission has charged both Changes Trading and Changes Worldwide with fraud. Also charged were Changes operator Timothy Baggett of Lakeland, Fla., and Kimball Parker of Lehi, Utah, along with Parker’s Utah company, MakeYourFuture LLC.

    The CFTC prosecution appears not to be related to the SEC’s TelexFree case, except in the sense that it demonstrates a continuing need for discernment and that discernment may be in short supply. Sloan is not a CFTC defendant.

    From the CFTC (italics added):

    The CFTC Complaint alleges that the Defendants engaged in a fraudulent scheme to misrepresent the profitability and success of a futures trading system that they sold to customers, including making fraudulent representations in marketing materials, on their websites, and in one-on-one communications with customers and prospective customers regarding the profitability of their trading system. According to the Complaint, from at least March 2014 through the present, the Defendants induced at least 289 customers to pay them more than $853,294.98 for the trading system.

    Specifically, as alleged, the Defendants made material, false representations in his solicitations of customers and prospective customers, including that their trading system had “never had a losing month,” and generated “300% annual returns.” According to the Complaint, to support these claims, Defendants posted so-called “documented and verifiable results” on their websites showing returns of between 11% and 68% each month from January through December 2014.

    However, as the Complaint further alleges, Defendants’ “documented and verifiable results” were false and did not reflect any actual trading of real money in any futures account. Meanwhile, according to the Complaint, Parker and Baggett consistently lost money trading futures in their personal accounts, and customers also consistently lost money attempting to trade according to the system, a fact that Defendants were made aware of by customer complaints.

    A bogus “live training room” and “robot” also were part of the scheme, the CFTC alleged.

    Kenneth D. Bell, the receiver in the Zeek Rewards Ponzi- and pyramid case, has raised the issue of promoters/participants jumping to new schemes. Robert Craddock, a figure in the Zeek scheme later charged with ripping off the Deepwater Horizon oil-spill fund, once had an association with Changes Worldwide.

    BehindMLM.com has some history on the Changes-related companies and notes Baggett also allegedly was involved in the BidsThatGive scheme.

    Read the CFTC complaint, which explains how Baggett’s MLM business purportedly selling vitamins and vacations allegedly ended up getting involved in the futures business.




  • CSA: ‘No Business Is Currently Registered Or Authorized To Market Or Sell Binary Options In Canada’

    Offshore scammers have their eyes on your pocket book.  “[N]o business is currently registered or authorized to market or sell binary options in Canada,” the Canadian Securities Administrators said in an Investor Alert today.

    The risk is not merely the loss of money, CSA said.

    “Canadians are exposing themselves to the high risk of identity theft and fraud when signing up for these platforms that often request their credit card information,” said Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers, Quebec’s secutities regulator. “The CSA warns investors that if they deal with these platforms, they risk the threat of thousands of dollars in unauthorized withdrawals on their credit cards and of being stuck with high-interest payments for a non-existent investment.”

    Binary options, CSA said, “are like ‘bets’ on how an asset (currency, stock, etc.) will perform in a limited amount of time – they are ‘all or nothing’ wagers, similar to gambling. However, even when investors see virtual gains, they often cannot access these profits as they don’t exist.”

    Read the CSA alert.

    On March 15, the U.S. Commodity Futures Trading Commission announced charges against two purported binary-options firms purportedly operating on the web from Israel.

    CFTC identified the defendants as Vault Options Ltd. and Global Trader 365.

    From the CFTC (italics added):

    In addition to alleging that Vault and GT 365 solicited more than $1 million from at least 50 U.S. customers, the Complaint alleges that Vault and GT 365 defrauded their customers by, among other things, misrepresenting and omitting the likelihood of profit and loss that customer make trading binary options, falsely claiming that customer funds were insured against losses, fraudulently inducing customers to send them more money before initial funds could be returned, and misappropriating customer funds. According to the Complaint, while Vault and GT 365’s websites touted large profits, many customers lost nearly all of their funds sometimes within days or a few weeks.




  • SEC: Binary Options Case Triggers Investor Alert

    breakingnews725Is there a double whammy in your MLM future — first being ripped off in a binary-options “program,” only to be ripped off a second time by scammers posing as government agencies and offering purported refunds for a fee?

    Naturally some MLMers have added binary options to their offerings, with some incredible solicitations and tales being told online. BehindMLM.com, for example, recently reported on the purported death of “Bob Roberts,” an asserted figure from a “program” known as Options Rider.

    In 2015, the PP Blog reported that Quebec’s securities regulator was concerned that binary-options scammers were steering people into reload schemes and posing as government entities. Meanwhile, there was the tale of SpotFN, a purported binary-options platform that reached across the oceans and plains to pluck investors in Missouri.

    At least one Missouri investor was told his money could be retrieved by paying a fee to a purported insurance company, authorities said.

    Binary-options “programs” also are appearing on the Ponzi boards, alongside HYIP, cycler and “advertising” scams.

    In 2013, the SEC brought an action against Cyprus-based Banc de Binary Ltd., its founder Oren Shabat Laurent and three affiliates alleging “that they failed to register the offering before soliciting U.S. customers through YouTube videos, spam e-mails, and other Internet advertising.”

    Banc de Binary has agreed to pay $11 million in a settlement, the SEC said today.

    This includes “$7.1 million in disgorgement and $1.95 million in penalties to the SEC as well as $2 million in penalties to the Commodity Futures Trading Commission (CFTC), which filed a parallel action,” the SEC said.

    “Banc de Binary and its affiliates completely disregarded U.S. laws and registration requirements, and as a result they must surrender millions of dollars and be suspended from the industry,” said Michele Layne, director of the SEC’s Los Angeles Regional Office.

    Harmed investors will receive a distribution from a Fair Fund administered by the National Futures Association, the SEC said.

    Although it is nice that money apparently is available to compensate Banc de Binary customers, that’s not always the case, perhaps particularly with cross-border schemes.

    The settlement wasn’t the only news the SEC announced today. Indeed, the agency announced an Investor Alert that warns of “impersonators” tag-teaming the Banc de Binary case.

    “The SEC has become aware of some impersonators claiming to be affiliated with the SEC or other government agencies who have contacted harmed investors in this Banc de Binary case and asked them to pay a fee to facilitate their settlement payout,” the SEC said.  “It’s important for all investors to know that the SEC never makes people pay to get their money back.”

    Read the Investor Alert. “Avoid becoming a victim twice,” the SEC urged.

    Read the CFTC’s statement, which says a U.S. federal court has imposed “a permanent ban on offering or trading any further off-exchange binary options to U.S. customers.”

    Read Banc de Binary restitution information from the National Futures Association.




  • BULLETIN: Traders Operated ‘The Cartel’; Banks Charged Criminally

    breakingnews72Forex traders at four multinational banks — Citicorp, JPMorgan Chase & Co., Barclays PLC and Royal Bank of Scotland plc — formed “The Cartel” and conspired to manipulate the prices of the U.S. dollar and the euro, the U.S. Department of Justice said today.

    All four banks have been charged criminally in an investigation that began when Eric Holder was Attorney General, said Loretta Lynch, Holder’s successor.

    UBS AG, a fifth multinational, has been charged criminally with manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates, the Justice Department said. The UBS prosecution came about after the agency ripped up an earlier nonprosecution agreement (NPA) with bank, alleging that UBS had violated the terms of a pact reached in December 2012 to resolve the LIBOR matter.

    Barclays also breached an NPA struck in June 2012 over the LIBOR matter and has agreed to pay an additional $60 million, the Justice Department said.

    The charges, all felonies, include conspiring to fix prices and rig bids. They are filed against Citicorp, Barclays, JPMorgan and RBS.

    A felony charge of wire fraud was filed against UBS, the Justice Department said.

    “In other words,” Lynch said, according to her prepared remarks released by the Justice Department, “UBS promised, in other resolutions, not to commit additional crimes — but it did.”

    As for Citicorp, Barclays, JPMorgan and RBS, Lynch said, “Starting as early as December 2007, currency traders at several multinational banks formed a group dubbed ‘The Cartel.’ It is perhaps fitting that those traders chose that name, as it aptly describes the brazenly illegal behavior they were engaged in on a near-daily basis. For more than five years, traders in ‘The Cartel’ used a private electronic chatroom to manipulate the spot market’s exchange rate between euros and dollars using coded language to conceal their collusion.”

    All five of the banks have agreed to plead guilty to the criminal charges at the “parent level,” the Justice Department said.

    Here, according to the Justice Department, are the market-manipulation timelines and the agreed-to criminal fines:

    • Citicorp, involved from as early as December 2007 until at least January 2013, $925 million.
    • Barclays, involved from as early as December 2007 until July 2011, and then from December 2011 until August 2012, $650 million.
    • JPMorgan, involved from at least as early as July 2010 until January 2013, $550 million.
    • RBS, involved from at least as early as December 2007 until at least April 2010, $395 million.
    • UBS (for NPA breach that occurred after December 2012), $203 million.

    A statement by the Justice Department includes the type of language the agency normally directs at street criminals when it is trying to send a message. In this instance, however, the language is directed at the banks. From the statement (italics added):

    Citicorp, Barclays, JPMorgan, RBS and UBS have each agreed to a three-year period of corporate probation, which, if approved by the court, will be overseen by the court and require regular reporting to authorities as well as cessation of all criminal activity.  All five banks will continue cooperating with the government’s ongoing criminal investigations, and no plea agreement prevents the department from prosecuting culpable individuals for related misconduct.  Citicorp, Barclays, JPMorgan and RBS have agreed to send disclosure notices to all of their customers and counter-parties that may have been affected by the sales and trading practices described in the plea agreements.

    Today, in connection with its FX investigation, the Federal Reserve also announced that it was imposing on the five banks fines of over $1.6 billion; and Barclays settled related claims with the New York State Department of Financial Services (DFS), the Commodity Futures Trading Commission (CFTC) and the United Kingdom’s Financial Conduct Authority (FCA) for an additional combined penalty of approximately $1.3 billion.  In conjunction with previously announced settlements with regulatory agencies in the United States and abroad, including the Office of the Comptroller of the Currency (OCC) and the Swiss Financial Market Supervisory Authority (FINMA), today’s resolutions bring the total fines and penalties paid by these five banks for their conduct in the FX spot market to nearly $9 billion. 

    Holder, Lynch said, “oversaw this investigation from its inception.

    “His relentless work made this resolution possible, and I want to thank him for his commitment to this important effort,” she said.

    Lynch replaced Holder last month.

  • BULLETIN: Zeek’s Burks, Wright-Olivares, Olivares Settle With Receiver; Agree To $600 Million Consent Judgment ‘To Be Satisfied With Substantially All Of Their Assets’

    paulburkszeek
    Paul R. Burks

    BULLETIN: (2nd Update 8:29 p.m. EDT U.S.A.) Three individuals alleged to be key insiders of the Zeek Rewards Ponzi- and pyramid scheme have agreed to a $600 million consent judgment with the court-appointed receiver.

    Receiver Kenneth D. Bell sued several alleged insiders, including Zeek operator Paul R. Burks, former COO Dawn Wright-Olivares and programmer Daniel Olivares, in late February.

    Now, Burks, Wright-Olivares and Olivares have agreed to a consent judgment of $600 million “to be satisfied with substantially all of their assets,” Bell said in court filings today.

    The settlement must be approved by the court. Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina is presiding over the cases of the alleged insiders.

    Other alleged insiders continue to challenge Bell’s complaint. If judgments are entered against Burks, Wright-Olivares and Olivares, continued litigation by other alleged insiders increasingly could become an uphill climb.

    Bell’s filing today also reveals that the receivership has recovered $107,697 from an FXDirectDealer (FXDD) account linked to Wright-Olivares through an entity known as “Wandering Rex.”

    FXDD was sued by the U.S. Commodity Trading Futures Commission (CFTC) last year, amid allegations it failed in its supervisory obligations by “employing a trading system that gave FXDD pricing advantages over [customers] and harmed thousands of its retail customers.”

    Whether Wandering Rex was a harmed customer was not immediately clear.

    “Wandering Rex was an entity established by Dawn Wright-Olivares and/or her affiliates through which Rex Venture Group funds were fraudulently transferred,” Bell advised Mullen today in a quarterly report to the court.

    Burks’ Rex Venture Group controlled Zeek.

    The PP Plog first reported on the Wandering Rex entity in January 2014.

  • BULLETIN: Pat Kiley, Trevor Cook Ponzi Pitchman, Sentenced To 20 Years in Federal Prison

    breakingnews72BULLETIN: Patrick Kiley, a radio host and conspiracy theorist who warned of “massive, massive chaos” and became a pitchman for the $194 million Trevor Cook Forex Ponzi scheme in Minnesota, has been sentenced to 20 years in federal prison.

    Kiley, 75, now becomes the fifth person sentenced to a long prison term in the epic Cook caper, one of the largest financial frauds in Minnesota history. The others include Jason Bo-Alan Beckman, 43, (30 years); Gerald Joseph Durand, 62, (20 years); and Christopher Pettengill, 56, (90 months).

    Cook was sentenced to 25 years. The defendants each face a restitution order of more than $155 million.

    Like other scams, the Cook fraud traces part of its downfall to a decision to trade on a famous name — in this case, UBS. But the real UBS sued for trademark infringement, prompting Cook and his cronies to adopt other names and immerse themselves in a deeper and deeper sea of incongruity. Conservative Christians were the principal targets.

    Kiley emerged a key Cook rainmaker, but ultimately tried to paint himself a Cook victim, describing Cook as “Pontius Pilate,” the Roman prefect many Christians believe authorized the crucifixion of Jesus.

    At one point, Kiley tried to turn the tables on the CFTC — like the SEC, one of the agencies to sue Cook and Kiley — by asking the judge overseeing the case to sanction a CFTC attorney $1,000 and make the penalty payable to Kiley. Kiley asserted the CFTC lawyer filed an “offensive” pleading. He also contended that SEC recordings of his pitch were filled with “distortions” and that a website bearing his name had been put together by an individual with a high “sleaze factor.”

    Kiley made these assertions, according to court documents, after he earlier had lied while asserting that Cook’s outsized returns were possible because the scheme was borrowing money at zero interest from a bank that complied with Shariah law, which forbids the payment of interest.

    A judge ultimately ordered Kiley to undergo a psychiatric exam and a medical exam, delaying his sentencing until today.

    From a statement today by federal prosecutors (italics added):

    In 2007, when UBS, AG, filed a trademark infringement lawsuit against Cook, Durand, Kiley, and others, the defendants began operating their scheme under other names, including but not limited to those identified by the terms “Oxford” and “Universal Brokerage FX.” They then continued to solicit investors for the currency program, utilizing telemarketing, media spots, and seminars in which they repeated the false representations noted above. Kiley, a Christian radio host, solicited investors for the scam through his radio talk show, which was carried on more than 200 stations across the country. On those programs, he regularly warned listeners to avoid financial ruin by giving their life savings to his company for investment.

    Some of the money linked to the Cook scheme literally was found jammed inside of walls. Other loot was found in a shopping-mall locker.

    Jon Jason Greco was sentenced to 10 months in prison for concealing loot linked to the Cook scheme.

  • URGENT >> BULLETIN >> MOVING: CFTC Sues U.S. Bank, Saying It Permitted Now-Jailed Scammer Russell R. Wasendorf Sr. To Borrow Against Customer Funds To Finance Iowa Headquarters Building Of Epic Fraud Scheme

    Russell R. Wasendorf Sr., before his two-decaded old fraud scheme collapsed in 2012 and affected 24,000 investors.
    Russell R. Wasendorf Sr., before his two-decade old fraud scheme collapsed in 2012 and affected 24,000 investors.

    URGENT >> BULLETIN >> MOVING: (UPDATED 2:54 P.M. EDT U.S.A.) The CFTC has gone to federal court in the Northern District of Iowa, accusing U.S. Bank National Association of permitting now-jailed scammer Russell R. Wasendorf Sr. of Peregrine Financial Group to use Peregrine customer funds as security “on loans it made to Wasendorf, his wife, and his construction company, Wasendorf Construction, L.L.C., to build an office complex for Peregrine in Cedar Falls, Iowa.”

    Not only that, the CFTC charged, U.S. Bank also permitted Wasensorf to treat investor funds held by the bank as if they were held in “Peregrine’s commercial checking account and knowingly allowed and facilitated Wasendorf’s transfers of customer funds out of this account to pay for Wasendorf’s private airplane, his restaurant and his divorce settlement.”

    U.S. Bank is the fifth-largest bank in the United States. It is based in Minneapolis.

    Forbes is reporting this afternoon that U.S. Bank denies the charges and is blaming the CFTC for not detecting Wasendorf’s fraud.

    Wasendorf is serving a 50-year prison sentence for his long-running fraud scheme that led to Peregrine’s spectacular collapse last summer.

    Federal law and CFTC regulations “prohibit depository institutions, like U.S. Bank, from using or holding funds that belong to customers of a Futures Commission Merchant (FCM) as though they belong to anyone other than the customers, and also prohibit the extension of credit based on such funds to anyone other than the customers,” the agency said.

    Customer funds must be held in segregated accounts, the CFTC said, alleging that “U.S. Bank knew that these transfers were not for the benefit of Peregrine’s customers.”

    Through the bank in 2010, the CFTC alleged, Wasendorf used an account at the bank holding customer funds to pay more than $2.46 million as part of a divorce settlement to his ex-wife.

    All told, the CFTC said,  between June 2008 and June 2012, more than $118 million floated through a U.S. Bank account under Wasendorf’s control, with about 94 percent of that sum consisting of customer funds.

    “[M]ore than 30% of those funds were used by Wasendorf for personal expenditures and his other companies,” the CFTC alleged.

    At least $5 million went to a Wasendorf restaurant known as My Verona. More than $13.5 million went to an entity known as Wasendorf & Associates and more than $2.5 million went to a Wasendorf “personal investment in Romania,” the CFTC said.

    Meanwhile, between June 2008 and June 2012, he transferred more than $1.1 million from an account holding customer funds to Wasendorf Air LLC, “the holding company for Wasendorf’s private airplane,” the CFTC charged.

    “The Commodity Exchange Act and Commission rules protecting customer funds impose obligations on banks that hold those funds,” said David Meister, the CFTC’s director of enforcement. “As should be apparent from today’s action, we will seek to hold a bank to account if it falls short on complying with customer fund protection obligations. Wasendorf stole vast sums of customer money, but his crimes do not excuse U.S. Bank from its own independent responsibilities.”

    Wasendorf, the CFTC said, “defrauded more than 24,000 Peregrine clients and misappropriated more than $215 million over two decades using a customer segregated account at U.S. Bank.”

  • ZEEK RECEIVER TO NET WINNERS: ‘The Time For Court Action Is Drawing Closer’

    UPDATED 1:20 P.M. EDT (APRIL 4, U.S.A.) The court-appointed receiver in the Zeek Rewards Ponzi scheme case has warned net winners that “the time for court action is drawing closer” and that “there is an opportunity for settlement.”

    Receiver Kenneth D. Bell published a letter to winners today on the website of the receivership.

    A snippet from the letter (italics added):

    The time for court action is drawing closer. I am sending this message to make sure that net-winners understand that there is an opportunity for settlement, but that the window for the opportunity is closing. To allow a reasonable time for all those who would like to pursue a settlement to do so, I am going to continue to make my team available to negotiate settlements for at least 60 more days. Therefore, if net winners want to pursue a settlement they should contact us by no later than May 31, 2013. After that date, I will assume that all net-winners that want to avoid the legal process by discussing settlement have done so, and I will move forward with court action, likely in June 2013, against the remaining net-winners.

    breakingnews72In August 2012, the SEC descibed Zeek as a $600 million Ponzi- and pyramid scheme operated by Paul R. Burks through Rex Venture Group LLC. Based on the number of victims, Zeek may be the largest Ponzi scheme in U.S. history.

    Bell noted in the letter that he already has discussed settlements with a “number of net-winners” and that “we have successfully negotiated payments which will, subject to Court approval, result in the release of the Receiver’s claims against those winners.”

    Some winners have received significant discounts, Bell said. But he noted that settlements depend on circumstances and that not all winners will get the same deal.

    “The settlements take into account the amount of the affiliate’s winnings, the nature of their involvement and their involvement of others, their cooperation, their ability to repay the money (and the time period in which the repayment can reasonably be made) and other individual factors and circumstances,” Bell said in the letter.  “The amounts of the settlements have ranged from approximately 40% to 80% of the affiliate’s net winnings. However, not all net winners have been or will be offered discounted settlements and the amounts of future settlements may vary from this range. The amount of the settlement offered to each net-winner will be based on the affiliate’s particular circumstances and ultimately must – in both my and the Court’s opinion – be in the overall best interests of the victims, considering the costs associated with the legal process.”

    Senior U.S. District Judge Graham C. Mullen of the Western District of North Carolina is presiding over the Zeek case.

    Mullen’s name also was in the news last week as a result of a different government action that alleged fraud.

    On March 27, the CFTC sought an asset freeze against James Harvey Mason of Graham, N.C., The JHM Forex Only Pool (JHM) and Forex Trading at Home (FTAH).

    Mullen granted the freeze, amid CFTC allegations that Mason fraudulently solicited “at least $1.1 million from at least 60 individuals to participate in off-exchange foreign currency (forex) commodity pools and misappropriat[ed] at least $600,000 of participant funds.”

     

  • UPDATE: Nicholas Cox, Figure In North Carolina Fraud Scheme Operating Near Ground Zero For Zeek Rewards, Sentenced To Federal Prison

    With the alleged $600 million Zeek Rewards Ponzi scheme dominating local headlines in North Carolina’s Piedmont Triad region, including the city of Lexington in Davidson County, an earlier, smaller fraud scheme operating in the region largely fell out of the news.

    ponziblotterBut the Integra Capital Management LLC Ponzi and fraud scheme operated by Nicholas Cox and Rodney Whitney is back in the headlines. Cox, 35, of Lexington, has been sentenced to three years in federal prison, followed by three years’ supervised release, for his role in Integra Capital’s $3.2 million commodities and Forex swindle.

    Whitney, 50, from the nearby community of Archdale, pleaded guilty in January. He was sentenced to five years in federal prison.

    The Integra Capital scam, which had a Ponzi component, operated between September 2006 and August 2009, the CFTC said in September 2010. Among other things, the fraud scheme was notable for destroying a myth: that “opportunities” that send out 1099 tax forms to investors could not possibly be operating a scam.

    Cox and Whitney were charged both civilly and criminally. The CFTC led the civil probe; the U.S. Postal Inspection Service led the criminal investigation. Cox was arrested in May 2011 in Denton, N.C. Like Zeek’s home base of Lexington, Denton is in Davidson County.

    During Zeek’s run, some promoters argued that the enterprise could not be a scam because it collected data to be used on tax forms. Promoters also argued that Zeek was above-board because it was registered as a corporation in North Carolina.

    Records show, however, that Integra Capital also was registered as a North Carolina corporation — with business addresses in the Triad cities of High Point, Denton and Archdale. Neither Integra’s registration nor the issuance of tax forms proved to be proper barometers for investors to follow.

    What matters in Ponzi and financial-fraud schemes is how the money moves within the sphere of the actual practices of a business, not whether a company is a registered entity that issues tax forms.

    Citing court documents, the U.S. Department of Justice said that “Cox and Whitney obtained and misappropriated more than $3.2 million in investor funds and fabricated account statements and tax forms to conceal their fraud.”

    In December 2012, Cox pleaded guilty to one count of conspiracy to commit mail fraud, five counts of mail fraud and one count of conspiracy to commit money laundering. Earlier, in March 2011, Whitney pleaded guilty to one count of conspiracy to commit mail and wire fraud and one count of conspiracy to commit money laundering.

    “Cox and Whitney used the money invested by later investors to pay the monthly investment returns they had promised to earlier investors,” prosecutors said today.

    And the Triad duo also bought real estate, funded other business ventures and purchased automobiles and other personal goods and services, prosecutors said.

    In September 2012, the SEC said Lexington-based Zeek was a “classic” Ponzi scheme in which “[m]ost of ZeekRewards’ total revenues and the ‘net profits’ paid to investors” were “comprised of funds received from new investors.”

  • BULLETIN: CFTC Alleges Robert Stanley Harrison Of Easley, S.C., Was Presiding Over Fraud Scheme That Guaranteed ‘100 Percent Profits’ In 90 Days Through Investors Choice Advisors LLC Commodity Pool; Federal Judge Freezes Assets

    XXX
    The case against Robert Stanley Harrison appears to have one of the signatures of an investment-fraud scheme: a website asking for “patience” owing to purported “improvements” in progress. The site also claims that God “wants you to be so blessed . . . so keep standing, keep hoping and keep declaring His Word . . .”

    BULLETIN: In a case filed under seal last week, the CFTC accused Robert Stanley Harrison of Easley, S.C.. of presiding over a commodity-pool and Forex fraud scheme in which investors were guaranteed a return of 100 percent in 90 days. The seal now has been lifted, and U.S. District Judge G. Ross Anderson has granted an emergency asset freeze.

    The scheme traded in part via “regular teleconferences with Pool participants” during which Harrison “touted his trading ability and the profits he was purportedly making for Pool participants,” the CFTC said.

    Separately, the Securities Division of the Office of the Attorney General of South Carolina accused Harrison last year of scamming investors through Investors Choice Advisors LLC, the same company referenced in the CFTC complaint. The Securities Division described Harrison as a man who “had multiple prior felony convictions which were not disclosed when he offered and sold securities.”

    Records in Pickens County, S.C., show several arrests on fraud charges for Harrison, including one on Dec. 19, 2012. The address in the Pickens County filings is the same address as Investors Choice Advisors LLC.

    Meanwhile, the website of the enterprise claims it is “undergoing improvements” and asks investors to be “patient.” A section of the website dubbed “Motivational Moments” carries this message:

    “During these challenging times, know that you are not alone. God has a plan to drive out the darkness — He will flood you with His light!”

    Here is part of what the CFTC said in the unsealed filing (italics added):

    Prior to expiration of their “Investment Contracts,” at least some of the Pool participants were solicited by Defendant and his agent to “roll over” their contracts for another 60 or 90 day term and, at the same time, to increase the principal amount of their investments.

    For example, after sending Defendant $1,000 for investment in the Pool in September 2011, one Pool participant received a contract via email from Defendant’s agent that reflected the Pool participant’s $1,000 principal investment and promised a return of $2,000 in 90 days.

    In November 2011, Defendant’s agent solicited this Pool participant to roll over her initial principal investment, along with her purported returns, and to invest additional funds in the Pool. Based on the representations that her initial investment was profitable, this Pool participant decided to roll over her initial investment and to invest an additional $28,000 in the Pool. After sending her funds to Defendant, the Pool participant received a new contract via email from Defendant’s agent in December 2011, which showed a principal investment amount of $30,000, including $1,000 in profits purportedly earned on her initial investment, and a guaranteed return of $60,000 in 90 days.

    The investor never got paid, despite repeated requests, the CFTC said. The agent’s name was not disclosed.

  • ‘Investor-Fraud Summits’ Set For 6 U.S. Cities: Stamford, Conn.; Nashville, Tenn.; San Francisco; Denver; Cleveland And Miami

    What: Investor Fraud Summits.

    Where/When: Stamford, Conn. (today from 9 a.m. to 1 p.m. EDT at the University of Connecticut – Stamford Campus); Nashville, Tenn. (Oct. 4 from 8:45 a.m. to 12:30 p.m. EDT at Vanderbilt University Law School’s Flynn Auditorium located at 131 21st Avenue South) ; San Francisco (Oct. 9, in Walnut Creek, Calif., from 9 a.m. to 1 p.m. PDT at the Rossmoor Retirement Community – Gateway Complex located at 1001 Rain Road); Denver (Oct. 10 from 8 a.m. to 12 p.m. MDT at the Tivoli Building – Turnhalle Auditorium located at 900 Auraria Parkway, Suite 150); Cleveland (Oct. 11 in Beachwood, Ohio, from 8:30 a.m. to 12:30 p.m. EDT at the Montefiore Senior Living Center located at 1 David Myers Parkway); and Miami (Oct. 12 from 9 a.m. to 1 p.m. EDT at the Miami Dade College – in the Chapman Conference Center, located at 245 N.E. Fourth Street, Bldg. 3, Room 3210).

    Why: Investment fraud losses have been “staggering,” the Justice Department says.

    Since the beginning of 2011, “the Justice Department’s Criminal Division and 85 U.S. Attorneys’ offices have reported that approximately 800 defendants have been charged, tried, pleaded or sentenced in approximately 500 federal prosecutions involving investor fraud. The total reported amount cheated from victims for this time period tops more than $20 billion.”

    Summit Sponsors: Department of Justice, U.S. Attorneys’ offices, the FBI, the SEC, the FTC, the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), the CFTC, the Bankruptcy Trustees, FINRA, AARP and the Better Business Bureau.

    Top law-enforcement officials will be on hand at each of the summits. See the Justice Department news release for details.