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Tag: CRE Capital Corp.

  • Regulator Cites Uptick In Ponzi Fraud

    “We are seeing an uptick in Ponzi scheme cases because, in this economic climate, new investors cannot be found to perpetuate the scheme. As these schemes collapse, the CFTC will move swiftly to prosecute those who harm innocent investors.” — Stephen J. Obie, CFTC

    “Run the other way” if someone promises you exorbitant investment returns, warned the acting director of enforcement for the the U.S. Commodity Futures Trading Commission (CFTC).

    In a statement, Stephen J. Obie also said regulators were seeing an uptick in Ponzi fraud because of the poor economy.

    Last week, CFTC charged James Ossie of Dawsonville, Ga., and his company, CRE Capital Corp. (CRE) of Alpharetta, Ga., with operating a Ponzi scheme that defrauded investors of about $25 million in a forex scam.

    CFTC said “Ossie and CRE promised pool participants that they would earn a 10 percent return on their money within 30 days by trading United States and Japanese currency pairs. The complaint further alleges that since June 18, 2008, rather than making money for pool participants, Ossie and CRE lost approximately $4.4 million trading forex.

    “Finally,” the agency said, “the complaint alleges that Ossie and CRE operated a Ponzi scheme, in which forex trading ‘profits’ were actually paid from the principal of subsequent pool participants.”

    Obie didn’t mince words.

    “Investors must run the other way when approached by anyone claiming to guarantee exorbitant monthly returns, like those promised by CRE and Ossie,” he said.  “Such representations should raise an immediate red flag that such investment is too good to be true.

    “We are seeing an uptick in Ponzi scheme cases because, in this economic climate, new investors cannot be found to perpetuate the scheme,” Obie continued.  “As these schemes collapse, the CFTC will move swiftly to prosecute those who harm innocent investors.”

    CFTC said the case against Ossie and CRE was the first brought by its Forex Enforcement Task Force. Congress granted the agency new powers last summer under the Food, Conservation, and Energy Act of 2008.

    Under its new mandate, CFTC is resposible for “investigating and litigating fraud in the  off-exchange retail foreign currency (forex) market.”

    CFTC’s task force will focus on fraud in the retail forex market and will work cooperatively with other federal and state regulatory and criminal authorities.

    “The formation of the CFTC’s new Forex Enforcement Task Force reaffirms our agency’s commitment to stopping unscrupulous individuals working in this space,” said Michael Dunn, head of CFTC’s  Forex Education and Outreach Task Force.

    “This announcement sends a clear signal that the CFTC is on the beat, and that our continued and increased cooperation with law enforcement authorities will help put these forex dealers where they belong – in jail.”

    Obie said forex fraud affects investors of all stripes.

    “With the creation of the retail forex task force, the CFTC has committed the resources necessary to expand its efforts to identify and prosecute those who commit fraud in the retail forex market.”

    The SEC also charged Ossie and CRE.

  • SEC Up To Its Ears In Ponzi Investigations

    The Securities & Exchange Commission has charged CRE Capital Corp. with running a Ponzi scheme that sucked millions of dollars from investors.

    Meanwhile, a hedge-fund operator in Florida has gone missing — along with $350 million in clients’ money. Although the Florida case is brand new and the SEC hasn’t announced a probe, it almost certainly will open one.

    Arthur Nadel, 75, has been missing since Wednesday. The Sarasota Herald-Tribune reported Nadel left a suicide note in a case that’s already being called a “mini-Madoff.”

    In the CRE Capital case, the SEC accused the Alpharetta, Ga., company and its president, James G. Ossie, of paying off old investors with money from new investors to create the illusion of profitability.

    Ossie and CRE suffered steep losses, the SEC said in its complaint.

    “In April 2008, CRE and Ossie opened a trading account in the name of CRE at Forex.com, a division of Gain Capital Group, LLC (“Gain Capital”). CRE and Ossie deposited over $5 million into the Forex.com trading account. Since June 18, 2008, CRE and Ossie traded foreign currency futures in the Forex.com account and incurred losses totaling over $4 million, including commissions and fees.

    “On or about December 2, 2008,” the SEC continued, “CRE and Ossie represented to Forex.com, in response to inquiries from that firm, that all of the funds they had deposited into CRE’s trading account were their own funds, and not those of customers or investors. These statements were false.

    “In approximately June 2008,” the SEC said, “CRE and Ossie opened a second trading account in the name of CRE in London, at Deutsche Bank. From June through December 2008, CRE and Ossie transferred $12 million of investor funds to the Deutsche Bank trading account in London. From June 2008 through January 8, 2009, CRE and Ossie’s currency trading in the account generated losses totaling $8,067,032.40.”

    CRE’s assets have been frozen and a receiver has been appointed.

    “CRE and Ossie fraudulently obtained at least $25 million from investors during 2008 by representing that it would use their money to engage in a currency trading program,” the SEC said. “Most investors were advised that they would receive guaranteed returns of 10 percent every 30 days, although a few investors were promised as much as 20 percent.

    The company employed multiple layers of deception to fleece investors, the SEC said.

    “CRE also falsely claimed that the firm and its program were audited by an outside accounting firm, which had concluded that CRE was not a Ponzi scheme,” the SEC said.

    Ossie and CRE also were charged with fraud “relating to their offer to sell $100 million in CRE stock that was slated to begin in early 2009,” the SEC said.

    “The SEC’s emergency action in this case will protect investors from further harm — both those who have invested and need all remaining assets preserved as well as those who were contemplating an investment,” said Katherine S. Addleman, regional director of the SEC’s Atlanta regional office.

    “We also want to remind investors to be skeptical of promoters promising exorbitant returns. Such claims should be a red flag to investors,” Addleman said.

    In the Nadel case, investors grew suspicious when they did not receive statements this month. The Herald-Tribune reported that one of the funds — “Scoop” — in Nadel’s three-fund portfolio could not meet a year-end demand for $50 million in redemptions.

    The others were known as “Viking” and “Valhalla.”

    People have filed complaints with Sarasota police — not the usual place one goes to file an investment-fraud report — but a place that demonstrates the word “Ponzi” has become positively nuclear.

    As was the case with the alleged Madoff Ponzi, local charities have been affected, as have investors’ sense of security and retirement income.

    And to think that some members of AdSurfDaily accorded Ponzi operator Andy Bowdoin folk-hero status.