A federal grand jury in Charlotte has returned an indictment against Jonathan D. Davey, 47, of Newark, Ohio; Jeffrey M. Toft, 49, of Oviedo, Fla.; Chad A. Sloat, 33, of Kansas City, Mo.; and Michael J. Murphy, 51, of Deep Haven, Minn., the office of U.S. Attorney Anne M. Tompkins of the Western District of North Carolina said.
It was a case that married a conspiracy to a series of lies and ultimately was unraveled by the FBI and the IRS, prosecutors said. Among the key new allegations is that a second Ponzi scheme emerged to replace one that had collapsed earlier.
Davey, a CPA, organized a Belize company known as Divine Circulation Services Ltd. that assisted now-convicted Black Diamond felon Keith F. Simmons in pulling off the $40 million scam, according to federal records.
Other corporate entities identified in a 2011 CFTC civil complaint as having links to the alleged scam also used names that conjured images of religion and safety. Davey also was at the helm of a Belize firm known as Sovereign Grace Inc., a firm that benefited from the scam, the CFTC said last year.
“The indictment also charges Davey with tax evasion for claiming to the IRS on his 2008 tax return that $810,000 that Davey stole from victims was a ‘loan,’” federal prosecutors said today. “In reality, the indictment charges, Davey stole that $810,000, plus approximately $500,000 in 2009, from victims to build Davey’s personal mansion.”
All four of the new criminal defendants are charged with conspiracy to commit securities fraud, conspiracy to commit wire fraud and conspiracy to commit money-laundering, prosecutors said.
Elements of the case as outlined in the CFTC’s civil complaint last year read like a work of impossible fiction. Regulators and other law-enforcement agencies increasingly have been squaring off against bizarre fraud schemes that seek to mask themselves behind shell companies both domestic and offshore. The schemes often feature appeals to greed and faith, amid claims of fantastic earnings.
Read the announcement about the new indictments on the FBI website, which also lists the names of individuals already convicted in the scheme.
BULLETIN: The CFTC has gone to federal court in Texas, alleging that Christopher B. Cornett of the town of Buda was operating a Forex- pool fraud and misappropriation scheme that gathered more than $14 million in phases between June 2008 and October 2011.
Cornett has been charged civilly with fraud, which allegedly operated through entities the CFTC identified as ITLDU, ICM, International Forex Management LLC and/or IFM LLC.
“[M]ost, if not all, of the profits, losses and account balances that Cornett reported to pool participants were false,” the CFTC said.
Five international agencies, according to the CFTC, assisted in the probe: the U.K. Financial Services Authority, the British Virgin Islands Financial Services Commission, the Ontario Securities Commission, Germany’s BaFin, and the Swiss Financial Market Supervisory Authority.
In 2003, according to the CFTC, the National Association of Securities Dealers (NASD) “barred [Cornett] with association with any NASD member in any capacity” and ordered Cornett to pay restitution in the amount of $28,423.73 for signing a customer’s name on the back of a check and using the funds for Cornett’s personal benefit without the authorization, knowledge or consent of the customer.”
NASD was the predecessor agency of the Financial Industry Regulatory Authority (FINRA).
Also in 2003, Cornett was sentenced to 37 months in federal prison after pleading guilty to five counts of bank fraud, the CFTC said.
Charles G. Martin has been sentenced to 17 years in federal prison — and fellow Forex Ponzi schemer John E. Walsh has been sentenced to more than 12 years — in a case in which investors’ money went to pay for strippers, fine meals, fine hotels, a piano, high-end electronics, artwork, jewelry, flashy cars and private jets, prosecutors said.
Martin, 46, formerly resided in Glencoe, Ill., and Malibu, Calif. Walsh, 63, lived in Lake Forest, Ill.
More than 1,000 investors “worldwide” got sucked into the scheme, which gathered more than $17 million. The fraud gained a head of steam even though Martin previously had been in trouble with the National Futures Association and had been barred from being a principal in a commodities firm, prosecutors said.
Martin and Walsh were principals of an entity known as One World Capital Group LLC.
“One World’s trading platform operated as a front to placate customers whose margin funds were being systematically misappropriated by them,” the office of U.S. Attorney Patrick J. Fitzgerald of the Northern District of Illinois said.
After investigators peeled back layers of the One World onion, they found that tax evasion had occurred, in addition to wire fraud and securities fraud, prosecutors said.
U.S. District Judge Virginia Kendall ordered restitution of more than $16.9 million.
Customers who provided money did not realize they were getting scammed out of the gate, prosecutors said. New money went to cover existing shortfalls in One World’s trading account, and tremendous sums were diverted to fuel extravagant lifestyles.
“Credit card and bank records show that Martin spent more than $1 million at a strip club and restaurants, nearly $1 million at elite hotels and another $1 million renting flight time on private jets,” prosecutors said. “He purchased a fleet of luxury vehicles, donated hundreds of thousands of dollars to celebrity charity events, and hired personal security guards to accompany him in public.”
Walsh also frittered away investors’ funds to live the high life, using his One World “credit card to charge personal expenses, including more than $140,000 of jewelry,” prosecutors said. “He also used $70,000 in One World funds for country club expenses and $1,425,000 to purchase a second home in Lake Forest.”
About $500,000 from investors was diverted to finance a movie “that had listed Martin as a contributing producer,” prosecutors said.
The FBI and the IRS handled the criminal probe, and the CFTC and NFA assisted, prosecutors said.
In December 2007, the CFTC obtained a trading halt and asset freeze. At the time of the freeze, One World had only $677,932 in assets and unpaid customer liabilities of more than $17.6 million, prosecutors said.
U.S. law enforcement has been counting victims of some individual fraud schemes in the thousands — or even the tens of thousands. The cases present unique logistical challenges because of their size and international reach.
In some scams, criminals have used dozens of shell companies and bank accounts to funnel money, hide it or spirit it away. Reverse-engineering a single scheme can take years.
“I dont care what the CONSOB or whatever says because I am not an Italian.” — TalkGold poster known as “WallStreetIsAPonzi,” Jan. 28, 2012
Even as CONSOB, the Italian securities regulator, is publishing an announcement on its website that promoters of a bizarre HYIP known as JSS Tripler are under investigation amid preposterous claims that investors receive an annualized return of 730 percent, promoters on Ponzi forums such as MoneyMakerGroup and TalkGold are thumbing their noses at the news.
JSS Tripler is an arm of “program” known as “JustBeenPaid” (JBP). Whether JBP plans to assist any of the companies or individuals identified in the CONSOB announcement in navigating the regulatory waters and preparing a defense in the weeks ahead is unclear.
What is clear is that some JBP promoters are reacting to the news by posting fresh “I got paid” posts on the Ponzi boards, even as JBP continues to use its website to advertise returns of “2%+ per Day” and “60% per Month!”
Visitors are advised they can “Increase Earnings with Daily Compounding” and glean affiliate “bonuses” totaling 15 percent over two tiers — on top of the annualized returns of 730 percent.
In the AdSurfDaily Ponzi case in 2008, U.S. District Judge Rosemary Collyer described “a confluence [of ASD] payment schemes” very similar to the payment schemes purportedly in place at JBP. JBP, though, is advertising a return rate double that of ASD, whose operator, Andy Bowdoin, later was arrested on charges of wire fraud, securities fraud and selling unregistered securities.
Bowdoin faces up to 125 years in federal prison and fines in the millions of dollars, if convicted on all counts.
In her 2008 ruling in the ASD case in which she refused to release money seized by the U.S. Secret Service as part of an international Ponzi probe, Collyer noted that ASD called its payouts to members “rebates.”
Separately, documents from Canadian investigators show that the word “rebates” was used in international scams, including Flat Electronic Data Interchange (FEDI) and the mysterious “Alpha Project.” At least one FEDI promoter is jailed in the United States, as is FEDI operator Abdul Tawala Ibn Ali Alishtari, also known as “Michael Mixon,” who was convicted on charges of operating an investment-fraud scheme and financing terror.
At MoneyMakerGroup yesterday — on the heels of the CONSOB news — a poster published seven purportedly recent payment proofs from JSS Tripler. Each of them used the word “rebate,” demonstrating that the purported opportunity also is using the same language as ASD and FEDI to describe payouts to members.
The MoneyMakerGroup member said he planned to buy a “motor home” and “start traveling the US” with his JSS Tripler money.
In the AdSurfDaily Ponzi case, several automobiles were seized as the alleged proceeds of a criminal scheme. A boat and marine equipment also were seized, along with computers and real estate valued at more than $1 million. All in all, the cash seizures to date in the ASD case total more than $80 million, including cash seized from individual promoters in at least four U.S. states.
U.S. federal prosecutors say that ASD in part tried to mask its $110 million Ponzi scheme by calling its payments to members "rebates." JSS Tripler, an arm of a "program" known as "JustBeenPaid," also refers to its payouts to members as a "rebate," according to this post yesterday at the MoneyMakerGroup Ponzi forum.
Although Frederick Mann, the purported operator of JBP/JSS Tripler, is described by supporters as a business genius and creator of a “masterpiece,” the program is using the same sort of language and bizarre presentations that drew the attention of law enforcement in the ASD and FEDI cases.
Elsewhere on MoneyMakerGroup, a member described the CONSOB development as “NONSENSE!”
Another member observed yesterday that JBP payouts came from an email address on a domain styled BigBooster.com. Why the payouts are associated with the BigBooster domain is unclear, but the BigBooster domain previously has been linked to the alleged ASD Ponzi scheme and Frederick Mann, the purported operator of JBP/JSS Tripler.
Separately, the TalkGold forum deleted a link to a PP Blog report on the CONSOB action. In the ASD case, a forum known as “Surf’s Up” routinely deleted links to the PP Blog. ASD members who relied on the Blog for information were described on the forum as troublemakers, and posters willing to consider the government’s point of view were described as “rats,” “maggots” and “cockroaches.”
ASD figure and purported “sovereign citizen” Kenneth Wayne Leaming was arrested by the FBI in November 2011 on charges of filing bogus liens against at least five public officials involved in the ASD case, including a federal judge, three federal prosecutors and an active-duty agent of the U.S. Secret Service who did some of the early legwork in the case.
The Secret Service employed undercover operatives in bringing the ASD prosecution.
One MoneyMakerGroup poster yesterday suggested that the CONSOB action was “crap” and claimed outright that JSS Tripler had “paid out over 10 million bucks.”
Whether the poster ever had seen the verified, audited books of JBP/JSS Tripler and other financial records such as bank and payment-processor statements to substantiate his claim is unclear. But even if the $10 million claim is true, the claimed sum was not broken down by recipient — and online scams are infamous for siphoning cash and concentrating it in the pockets of program sponsors and insiders.
Promoters of fraud schemes often pass along company lies and deceptions to recruits and prospects, a situation that U.S. government agencies, including the Secret Service, the SEC and the CFTC, have noted in prosecutions involving individual, commission-based promoters.
The same MoneyMakerGroup promoter also ventured the CONSOB action came because “governments are not getting a cut of this revenue,” further asserting that “the only reason they are starting to do probes and crap (sic) not because they care about protecting you from loosing (sic) your money.”
ASD members made similar claims. Like JBP/JSS Tripler, ASD also was promoted on the Ponzi boards — as were at least three purported ASD clones, all of which have ceased to operate. The cost to investors is unknown.
Like ASD, JSS Tripler also appears to have a clone — one that actually uses JSS Tripler’s name to form its own name. That “program,” known as JSS Triper 2 or T2, appears now to be changing its name to T2MoneyKlub. Regardless of the name, T2 also was hawked on the Ponzi boards and appears even to have given birth to itself on a Ponzi board as a result of a dispute with JBP/JSS Tripler.
Federal prosecutors said ASD also changed its name, morphing from just plain AdSurfDaily into ASD Cash Generator. Court records suggest that changing names was part of ASD’s criminal plan and that the change occurred after the initial ASD Ponzi collapsed and after certain payment conduits began to come under government scrutiny.
Among the MoneyMakerGroup posters who published “I got paid” posts for JBP/JSS Tripler yesterday was “10BucksUp” — his second such post since the CONSOB action became public.
“10BuckUp” previously pushed Club Asteria, anotherPonzi-forum darling that came under CONSOB scrutiny. In addition to displaying no apparent respect for CONSOB, “10BucksUp” let it be known in September 2011 that he also was a pitchman for Cherry Shares, a collapsed program referenced in June by Canadian regulators.
Cherry Shares also was a Ponzi-forum darling.
Whether “10BucksUp” and other JBP/JSS Tripler promoters planned to tell their existing recruits and prospects about the fact CONSOB is targeting individual promoters in a 90-day suspension order related to the purported JBP/JSS Tripler program is unclear.
Also unclear is whether JBP/JSS Tripler will inform existing participants and prospects about the CONSOB action.
Members of any “opportunity” that purports to pay an absurd return always are at great risk. The risk becomes even greater if they are denied information about investigations. Promoters who do not disclose the presence of an investigation or simply rely on the company line (or lack thereof) potentially are at greater risk of prosecution as individual promoters.
In the ASD case, for instance, federal prosecutors said the company was collecting money from new members and funneling it to original members affected by ASD’s first collapsed Ponzi — without informing new enlistees and prospects that their money was being used to prop up losers from the initial scheme and to help the second Ponzi gain a head of steam.
The personal assets of a number of individual ASD promoters were targeted in forfeiture actions or affidavits, with the government seizing sums in several bank accounts in multiple U.S. states. These sums totaled in the hundreds of thousands of dollars, according to court records.
UPDATE: Jeffery (also cited as “Jeffrey”) L. Groendyke, the Michigan man ordered by a federal judge earlier this month to pay nearly $1.4 million in restitution and penalties in a Forex Ponzi case brought civilly by the CFTC, now has pleaded guilty to a criminal charge of wire fraud, federal prosecutors in the Western District of Michigan said yesterday.
Groendyke, 41, admitted he fraudulently obtained about $1 million from investors in his JG Forex Fund and misappropriated money, the office of U.S. Attorney Donald A. Davis said.
The guilty plea followed an investigation by the FBI, prosecutors said.
Groendyke was charged civilly in May. In November, court filings by the CFTC alleged that funds from Groendyke’s fraud scheme made their way to Nicholas Trimble, who was running a fraud scheme through Capstone FX Quantitative Analysis Inc. that involved a purported “automated forex robot trading system” known as the “Gladiator system.”
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.
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, the CFTC charged.
A federal judge in Colorado froze Trimble’s assets.
Claims about miraculous trading platforms and software frequently accompany Forex fraud schemes, which often are targeted at people of faith and sometimes include webinars.
Groendyke is free on bond. Sentencing is anticipated in March.
Jeffery L. Groendyke, the Michigan man accused by the CFTC in May of targeting people of faith and others in a Forex Ponzi scheme, has been ordered to pay $963,141 in restitution and a $420,000 civil penalty.
U.S. District Judge Robert J. Jonker issued the order against Groendyke by consent, finding that he fraudulently solicited $1,009,844 from 42 individuals, lost some of it trading and making Ponzi payments and sent $501,510 to an entity known as Capstone FX.
The CFTC last month charged Captone and its operator Nicholas Trimble with fraud, amid allegations Trimble spent investors’ money in Las Vegas casinos, fabricated an office in Utah (and a miraculous trading platform) — and told other lies to separate people from their money.
Groendyke’s scheme caused an apparent Groendyke supporter to visit the PP Blog in the spring and claim “I can’t wait to laugh at the CFTC.”
The same poster demanded, “Do some homework bitch.”
For the breakdown on how investor funds were dissipated in the Groendyke scheme and how investors were hoodwinked by false statements, read the judicial order against Groendyke.
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.”
Captured In Hong Kong: Former TV analyst and accused Ponzi schemer Brian Kim.
UPDATE: On the lam for 10 months, accused Ponzi-scheme fugitive Brian Kim was arrested last month and returned to the United States from Kong Kong, authorities said yesterday.
Kim, 36, is a former analyst who appeared as a CNBC commentator on issues such as the Dubai debt crisis and so-called “dark pools.” Investigators said he was involved in at least two fraud schemes while holding forth on TV. Kim high-tailed it out of the United States before he could be tried in early January on state charges of stealing $430,000 from Christadora House, the New York condominium complex at which he resided, authorities said.
Even as the theft matter was being investigated and prosecuted, Kim was at the helm of a separate, $6 million Ponzi scheme, said Manhattan District Attorney Cyrus Vance. The CFTC also charged Kim in the alleged Ponzi caper, which operated through a firm known as Liquid Capital Management LLC.
Vance next brought a state grand-jury indictment against Kim for bail-jumping, and federal prosecutors charged him with passport fraud.
Authorities did not say when Kim was caught in Hong Kong. Vance said the U.S. Marshals Service, the U.S. State Department, the U.S. Consulate in Hong Kong and Chinese officials cooperated in bringing Kim back to the United States to face justice.
In April, a federal judge ordered Kim to pay restitution and civil penalties of more than $12.5 million in the case brought by the CFTC.
Like accused Ponzi schemer Andy Bowdoin of AdSurfDaily, Kim will face a civil judgment while battling criminal Ponzi charges.
Screen shot from federal court files: These relief defendants — all of which were Delaware companies tied to a North Carolina Ponzi scheme that also reached into Florida and Nevada — were ordered to disgorge more than $22 million in ill-gotten gains. Law enforcement increasingly is encountering fraud schemes that use shells in multiple jurisdictions to keep money flowing.
U.S. District Judge Robert J. Conrad Jr. of the Western District of North Carolina has ordered tens of millions of dollars in restitution, penalties and disgorgement in the civil Ponzi case against Sidney and Charlotte Hanson. The CFTC charged the North Carolina couple and their “Queen Shoals” companies in 2009, alleging a Forex Ponzi scheme aimed at the individual retirement accounts of seniors and people near retirement age.
The Hanson scheme has been tied to firms in Nevada and Delaware — and also operators in Florida, Gary D. Martin and his wife Brenda K. Martin, who drove cash to themselves and the Queen Shoals entities and recruited pitchmen.
Sidney Hanson, 64, is serving a 22-year prison sentence in the same North Carolina facility that houses Bernard Madoff. As the Hanson events infolded, investigators — including an undercover investigator for the state of North Carolina — discovered schemes within schemes that targeted older investors and people of faith in a complex caper involving companies with high-sounding names.
The Hansons used proceeds from the scheme to purchase an 88-acre farm, use private planes and take luxury vacations, the CFTC said. They also lived in a property “owned” by Queen Shoals.
Conrad ordered restitution by the firms and the Hansons of $23 million, plus interest, and an interest-accruing civil penalty of $1.2 million. Various relief defendants were ordered to disgorge more than $22 million in ill-gotten gains.
Among the complexities of the case — which investigators reverse-engineered — were the corporate set-ups of the Queen Shoals and related firms and their reach across multiple jurisdictions.
Queen Shoals LLC, for instance, was formed in Nevada, but operated from North Carolina. Queen Shoals II LLC was formed in Delaware, but also operated from North Carolina — in the same purported Charlotte “suite” from which the original Queen Shoals operated.
Select Fund LLC also was formed in Delaware, but used the Charlotte “suite.”
The relief defendants — Secure Wealth Fund LLC, Heritage Growth Fund LLC, Dominion Growth Fund LLC, Two Oaks Fund LLC, Dynasty Growth Fund LLC and Queen Shoals Group LLC — all were formed in Delaware.
BULLETIN: Civil and criminal charges were filed in Florida today against Miami resident Oscar Hernandez, amid allegations he was operating a $3 million Ponzi scheme through Midway Trading Company LLC and Conquest Investment Group Inc., the CFTC said.
The office of U.S. Attorney Wifredo A. Ferrer of the Southern District Of Florida said Hernandez has been charged criminally with fraud and conspiracy.
In its complaint, the CFTC painted a picture of a noxious financial fraud that proliferated in part because a Hernandez customer led cheers for the scheme. The customer displayed copies of checks presented him by Hernandez, and the checks became a form of social proof that Hernandez was on the up-and-up, according to the complaint against Hernandez.
The customer ultimately persuaded about eight others to invest with Hernandez, which caused at least $1 million more to flow to the Hernandez Ponzi, the CFTC alleged.
The scheme operated between 2005 and 2009, netting more than $3 million. Hernandez and the firms “misappropriated approximately $1.8 million of participants’ funds for personal use, including car, mortgage, and credit card payments, and used misappropriated funds for so-called profit payments to participants,” the CFTC said.
Investors were told Hernandez had developed a “special program” to trade futures and that annual returns of 180 percent were possible, the CFTC said.
The CFTC, the FBI and federal prosecutors in the Southern District of Florida cooperated in the probe, the CFTC said.
“By late 2008, Defendants made payments only intermittently, not monthly,” the CFTC charged. “Participants received their last payments in early 2009, and have not received a monthly payment or the return of their principal since that time.”
Neither Hernandez nor the companies was registered with the CFTC “in any capacity,” the agency said.
A Hernandez customer named Omar Aguilera began trading with Hernandez with $50,000 in 2005, according to the CFTC. By 2007, Aguilera and his wife upped their stake to $1 million with borrowed money.
“Aguilera began to recommend the investments that Hernandez was making through Midway and Conquest to many of his friends and relatives, showing them copies of the checks he had received as proof of the profits he was earning,” the CFTC said. “Aguilera repeated what Hernandez had told him — that he would use any funds they invested for futures day trading, and that the investment carried no risk.”
Over time, the scheme spread by word-of-mouth — to the point where “some participants invested without ever talking to Hernandez,” the CFTC said. “Early participants in the scheme received considerable ‘returns.’”
But “the checks that Hernandez sent to Aguilera from the Midway and Conquest bank accounts were not profits from futures trading, but were funds that Hernandez had received from other participants and deposited in the Midway and Conquest bank accounts,” the CFTC charged. “Hernandez used only a portion of the funds he obtained from participants to trade futures in the Midway and Conquest trading accounts, losing approximately $1.3 million in the process, and used the remainder either to pay off obligations to other participants, or to pay for his own personal living expenses.”
When the Ponzi collapsed, Hernandez told “a variety of false stories,” the CFTC said.
UPDATED 8:14 P.M. EDT (U.S.A.) The Commodity Futures Trading Commission has gone to federal courts in four different states and simultaneously filed actions against 11 separate companies in the second phase of an enforcement sweep.
The firms, some of which conduct business offshore but allegedly use webhosting companies or other service-providers in the United States, are accused of illegally targeting U.S. customers. In addition to today’s actions against 11 firms, 14 companies were charged in January, bringing the sweep total to 25.
Not all of the firms charged today used U.S.-based webhosts or service-providers or had a physical footprint in the United States, according to court records. At least one of the firms used the services of technology companies in Hong Kong and Canada, but all of the firms allegedly had the capacity to transact business with U.S. customers over the Internet.
“These actions reflect the CFTC’s continued resolve to make the forex market safer for investors by strictly enforcing the CFTC’s new forex regulations, which became effective in October 2010,” said David Meister, CFTC’s director of enforcement. “These new regulations require entities that wish to participate in the forex market to register with the CFTC and abide by regulations that are intended to protect the public from potentially fraudulent operations.”
Named defendants in today’s announced cases were:
1st Investment Management LLC, a Wyoming LLC.
City Credit Capital (UK) Ltd., a United Kingdom company.
Enfinium Pty Ltd., an Australian company.
GBFX LLC, a New York LLC.
Gold & Bennett LLC, a New York LLC.
InterForex Inc., a British Virgin Islands company.
Lucid Financial Inc., a Utah corporation.
MF Financial Ltd., a Belize company with offices in New York City.
O.C.M. Online Capital Markets Limited, a British Virgin Islands company.
Trading Point of Financial Instruments Ltd., a Cyprus company.
Windsor Brokers Ltd., a Cyprus company.
The agency said it “strongly urges the public to check whether a company is registered before investing funds. If a company is not registered, an investor should be wary of providing funds to that company.”
CFTC said today that it received assistance in its probe from the U.S. Attorney’s Office for the District of Wyoming, the Utah Attorney General’s Office, the Utah Division of Securities and the U.K. Financial Services Authority.
Each of of the firms was charged with violating provisions of the Dodd-Frank Act and other U.S. laws.
BULLETIN: With seven defendants already convicted of Ponzi-related crimes and a North Carolina bank accused of turning a blind eye to the fraud, four new criminal defendants have been named in the Black Diamond Capital Solutions probe.
