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Tag: National Futures Association

  • 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.




  • OUR ANSWER: ‘Nuts!’ PP Blog Receives Threat That ‘Authorities’ Will Move Against It If It Doesn’t Remove Content About Profitable Sunrise Figure Nanci Jo Frazer And Others; Email Claims FBI ‘Fully Aware Of All Your Consistent Attempts’ To Harm Frazer Group

    profitablesunrisethreateningemails

    “No!” Make that “Hell no!” — or, as Gen. Anthony McAuliffe once famously scribbled at the prompting of Gen. Harry W.O. Kinnard during the Battle of the Bulge, after soldiers for the Nazi Third Reich demanded surrender: “Nuts!”

    At 12:11 a.m. ET today, the PP Blog inexplicably received five duplicate emails from an IP in the vicinity of Tiffin, a city in North Central Ohio. The emails were sent through the Blog’s contact form and threatened that “the authorities” would get involved if the Blog did not remove content about Nanci Jo Frazer and other Profitable Sunrise story figures by Nov. 15, nine days from today. The emails were signed “Nanci Jo Frazer,” but the Blog cannot independently confirm Frazer was the sender.

    Why the Blog received five emails is unknown. The Blog tested the form after receiving the duplicated submissions, and it appears to be working properly, meaning it does not appear to be sending multiple copies of inquiries from readers. The Blog, however, did experience an outage that lasted approximately two hours yesterday. The outage occurred shortly after an IP from Ukraine made an appearance here at approximately 1:50 p.m. (Bots that leave a Ukranian signature have been circling the Blog for weeks.) The precise cause of yesterday’s outage, which occurred after the Blog reported on an HYIP/prime-bank scam in California outed as part of an FBI undercover operation that began in 2006, remains unclear.

    In any event, the Blog will not remove any Frazer or Profitable Sunrise-related content unless ordered to do so by a U.S. federal judge. Nor will it submit to threats that incongruously are mixed with appeals to the Christian faith to make posts go missing. HYIP schemes are all about incongruities and preposterous constructions: “secret” or “safe” or “guaranteed” or “insured” investments that purportedly are “offshore” and able to deliver Christians and other people of faith legitimate interest rates of hundreds or even thousands of percent each year, for instance.

    For security reasons, the Blog will not reply to the emails at the Gmail address entered by the sender. Instead, it will publish the content of the emails in this  space. The FBI is free to make its own assessment about acts attributed to the agency by the sender in or around Tiffin. The Blog also will continue to publish Profitable Sunrise-related stories. Such stories are in the public interest.

    The emails build on a conspiracy theory that has been circulating for weeks: that the Blog somehow acts in concert with fraudsters, cyberstalkers and at least one felon posing as a Christian do-gooder to subject Nancy Jo Frazer and her ministry to harm. Meanwhile, the emails plant the equally false seed that the Blog is part of a group involved in Bitcoin scams.

    Among other things, the emails seek to chill the Blog’s reporting by contending that “The FBI is fully aware of all your consistent attempts to keep my name and our FocusUp Ministries Board members, our staff, voluteers and even my husband (who had no connection) tagged to negative , damaging words (such as scam, fraud and Ponzi) along with negative press and stories we are not connected to at all.” (No editing performed by PP Blog.)

    “Last week through a phone conversation, the Senior investigator from the FBI, instructed me to have my attorney send you a Cease and Desist and demand for immediate removal of your unauthorized usage of materials, videos, audio, all radio & TV media, articles and all types of communication connected to FocusUp Ministries and our Board Members, staff and volunteers: including Nanci Jo Frazer (Nancy Frazer) and Albert Rosebrock, David Steckel (volunteer), Jon Simmons (staff pastor) also my husband David Frazer,” the emails read in part. (No editing performed by PP Blog.)

    The emails did not identify the purported “Senior investigator from the FBI” who purportedly gave the sender instructions on how to accomplish the deletion of PP Blog content the apparent Frazer group supporter finds both objectionable and actionable. The PP Blog is willing, however, to voluntarily provide the IP address of the sender to the FBI, the SEC, the Ohio Office of the Attorney General or other law-enforcement agency in the United States that has an interest in the Profitable Sunrise case.

    No subpoena will be necessary; we’ll simply provide the information and copies of the email, once the Blog verifies the request is genuine.

    Over the years, the PP Blog has encountered various bids to chill its reporting on the HYIP sphere, including a sustained DDoS attack in 2010 and traffic floods in 2011 for which the Blog received a claim of responsibility. The Blog forwarded the claim to a U.S. law-enforcement agency.

    In 2012, during a period of heavy reporting on two specific HYIP schemes, the Blog received repeated threats believed to be from different senders. Two of the threats were not aimed at the Blog. The first was received Aug. 6, 2012, and was aimed at three prominent U.S. politicians: one Democrat and two Republicans.  This communication appeared to have been sent from Switzerland and questioned why the American politicians are “still alive and running around.” The email further described an American subject of the PP Blog’s crime reporting as a “true Patriot[]” who, like other purported “Patriots,” believed in “sending out mercenaries to take out those corrupt bankers, USG politicians, agents, judges and attorney’s [sic].”

    Such content is consistent with members of the so-called Patriot Movement or similar U.S. extremists who identify themselves as “sovereign citizens.” Because the communication appears to have originated in a country famous for banking secrecy, it leads to questions about whether U.S. domestic extremists were networking with counterparts in Europe or perhaps were there themselves to “defend” HYIP schemes and chill reporting on the outrageous frauds by suggesting that mercenaries and assassins were at their disposal.

    The second communication, received Aug. 29, 2012, was aimed at the alleged operator of a huge international Ponzi scheme. This communication appears to blame the accused operator for not properly defending the purported opportunity from investigations by the U.S. government.

    “why you don’t stand to back [program name deleted by PP Blog][?]” the communication read in part.

    “we lost our money. we will kill you . . .”

    The communication concluded by slurring the alleged Ponzi operator as a “dog.” It appears to have been sent from Pakistan.

    Yet-another 2012 communication believed to be from a different sender suggested that members of the PP Blog’s family might die if the Blog continued to report on HYIP schemes. The Blog forwarded all of these communications to a U.S. law-enforcement agency.

    In 2009, the Blog repeatedly was stalked by an apologist for the AdSurfDaily and AdViewGlobal Ponzi schemes who sought to engineer an SEO campaign against the Blog. This tactic was repeated in 2012 by an apologist for the JSSTripler/JustBeenPaid scheme which, like ASD and AVG, may have ties to the “sovereign citizens” movement.

    This specific individual appears to have been inspired in part by an infamous troll whose posts and visits bear an IP signature from the United Kingdom. The troll has been attacking antiscam sites since at least 2009, often incorporating sexual innuendo, antiChristian themes and elements of misogyny into his bizarre and vulgar game plan. In any event, the JSS/JBP apologist he inspired asserted he’d defend purported operator Frederick Mann “so help me God.” He also targeted specific PP Blog readers in an SEO campaign carried out on a free Blogger site — all while spreading absurd conspiracy theories and utterly preposterous lies. At the same time, he appears to have embedded code in certain communications as a means of trying to identify potential federal witnesses and perhaps even obtain/isolate the identities undercover federal agents may use online.

    Requests for the Blog to delete content are not always menacing, but can be described fairly as mind-bogglingly bizarre. In 2010, an affiliate of the MPB Today MLM scheme asked the Blog to delete a story that reported President Obama and former Secretary of State Hillary Rodham Clinton were being depicted as Nazis in a promo designed to recruit MPB Today affiliates. A separate script from the same MPB Today recruiter described the Obama family as welfare recipients who aspired to eat dog food and put these words into the mouth of First Lady Michelle Obama: “Hmm, I should prolly call my Food Stamp worker now that I’ve joined MPB.”

    The Blog declined the deletion request.

    MPB Today operator Gary Calhoun later was jailed in Florida on state-level racketeering charges. Federal prosecutors contended in July 2012 that crimes such as access-device fraud and fraud in connection with identification documents had occurred. Some MPB Today affiliates claimed the purported grocery “program” had been endorsed by the U.S. government and Walmart and that impoverished prospects should sell their Food Stamps to raise the $200 needed to join MPB Today. At least one MPB Today affiliate referenced pipe bombs in a promo.

    In May 2009, the PP Blog reported that the AdViewGlobal scam announced it had secured a deal with a new offshore wire facilitator. The AVG announcement was made on the same day the President of the United States announced a crackdown on offshore fraud. The PP Blog later was asked by AVG’s purported facilitator to remove the story. The Blog refused.

    The purported AVG facilitator — KINGZ Capital Management Corp. — later was linked to the epic Trevor Cook Ponzi scheme in Minnesota and was booted from the National Futures Association. AVG earlier had collapsed in a pile of Ponzi rubble. Even as it was going down, critics of the “program” and even members concerned about where their money had gone were threatened with lawsuits and ISP terminations for speaking out online.

    Federal prosecutors later linked the AVG scam to the $119 million AdSurfDaily Ponzi scheme broken up by the U.S. Secret Service in 2008. ASD story figure Kenneth Wayne Leaming, a purported “sovereign citizen,” is serving a federal prison sentence for targeting federal employees involved in the ASD case with bogus liens seeking billions of dollars, assisting a known tax fraudster in the filing of false liens, harboring federal fugitives in a case unrelated to ASD and being a felon in possession of firearms.

    HYIP schemes are a cancer on America and the rest of the globe because they permit the murkiest of figures to acquire tremendous sums of money that endanger the United States and other nations. They are a scourge on society in no small measure because they attract “sovereign citizens” and other extremists whose intent is to undermine legitimate markets and create widespread confusion, if not anarchy. People of faith often are targets of HYIP scammers. The scams often switch forms, but the criminality remains largely the same.

    In the case of Profitable Sunrise, the SEC has alleged that potentially tens of millions of dollars were driven to an individual potentially operating overseas. This individual’s identity may not be known. The allegations alone are chilling.

    Frazer and her associates are not named in the SEC civil action. But Frazer and two of her alleged business associates — husband David Frazer and Nancy Frazer business associate Albert Rosebrock — are named in a Profitable Sunrise-related civil fraud action filed by the state of Ohio in July.

    As noted above, the PP Blog will not remove any Frazer or Profitable Sunrise-related content. Here, now, the verbatim content of the emails received by the Blog at 12:11 a.m. today. (The Blog added carriage returns to make the contents more readable.)

    The Emails

    Dear Patrick;

    I am send you this private (not to be published or shared) email to you as a Christian brother, from your Christian sister, in hopes to have your assistance to stop all media coverage concerning our Ministry and our volunteer board members without having to get the authorities involved to get this accomplished.

    We understand that you have been trying to find the truth about Profitable Sunrise. The FBI has fully reviewed every document, communication and record we have and has returned everything to us. Our lead investigator stated that it is clear that we were a victim of “innocent ignorance”.

    The investigation resulted in no criminal charges being filed. The Federal Government has confirmed we are not being named in this case. Kansas is in the process of dismissing the case and Ohio has stated they do not have enough information to move forward (after losing the majority of the assets at our hearing on August 30th, 2013). We are so thankful that we are finally being vindicated and can speak out soon.

    2013 has been a refining year but so many awesome miracles have occurred that I cannot just feel there was no positive purpose. We believed that Profitable Sunrise was the “real deal”. We know that many of you believe that BitCoin is the “real deal” but in Texas, it is now declared a security and to some- part of a Ponzi? We sometimes learn things the hard way.

    The FBI is fully aware of all your consistent attempts to keep my name and our FocusUp Ministries Board members, our staff, voluteers and even my husband (who had no connection) tagged to negative , damaging words (such as scam, fraud and Ponzi) along with negative press and stories we are not connected to at all. Thus driving traffic to your website for your own purpose.

    Last week through a phone conversation, the Senior investigator from the FBI, instructed me to have my attorney send you a Cease and Desist and demand for immediate removal of your unauthorized usage of materials, videos, audio, all radio & TV media, articles and all types of communication connected to FocusUp Ministries and our Board Members, staff and volunteers: including Nanci Jo Frazer (Nancy Frazer) and Albert Rosebrock, David Steckel (volunteer), Jon Simmons (staff pastor) also my husband David Frazer.

    I am requesting that Patrickpretty.com and all associate websites, blogs and media… Cease and Desist immediately from using images, text, tags,YouTubes, Powerpoints, articles, documents and recordings associated in any way with the patrickpretty.com website, which is containing or referring to Nanci Jo Frazer, Nancy Frazer, David Frazer, Albert Rosebrock, David Steckel, Jon Simmons and FocusUp Ministries and/or any of our associate Ministries, as you are not authorized to use our names or image for any purpose without written permission.

    We have spent hundreds of hours of research to help authorities in everyway to fully understand and solve this case. We are almost to the point whereas I can share what I have learned to help avoid this event from happening again. I believe in going to my Christian brother first to resolve an issue. I believe that your heart is in the right place.

    We need to see that everything is deleted and completely removed from the Internet by Friday, November 15th, 2013 so we can all move on. I hope you honor this and that we can start over and have this be a much better story for all.

    Thanks Patrick!
    Nanci Jo Frazer

  • BCSC: Scammers Ripped Off Canadians In Forex Scam In Which Money Was Wired To Costa Rica; At Least 1 Investor Duped Into Making Payment Of $13,000 Purportedly For U.S. Taxes In Ill-Fated Bid To Recover Lost Principal

    breakingnews72EDITOR’S NOTE: The PP Blog reported yesterday about a massive alleged penny-stock scam married to an advance-free fraud scheme in which investors were duped into believing they were interacting with IRS employees trying to collect taxes and a law firm interested in recovering funds from the stock swindle. Federal prosecutors in Brooklyn said the scammers simply posed as IRS agents and fabricated the law firm. Some of the money from the $140 million, multipronged caper ended up in Beirut.

    There now is word that investors in Canada’s province of British Columbia were swindled in a similar 2012 scheme in which they were instructed to wire money to Costa Rica.

    The British Columbia Securities Commission is investigating an alleged cold-call swindle in which three investors in the Canadian province lost a total of $80,000 to an entity using a poached virtual office and purporting to operate from Chicago.

    The name of the entity, according to BCSC, was Strategic Global Investments (SGI).

    SGI claimed to be “a Chicago-based investment firm in the business of foreign exchange and commodities trading,” BCSC said.

    Regardless, SGI asked investors to wire money “to the company’s bank account in Costa Rica,” BCSC said.

    The purported firm called investors with an offer for “gold options,” BCSC said.

    But SGI was not registered with BCSC. Nor was it registered with the National Futures Association and the Commodities Futures Trading Commission.

    Moreover, BCSC said, “SGI’s claimed head office belongs to a Virtual Office Company that never leased it to SGI.”

    Although any number of scams have used virtual offices, the allegations in British Columbia suggest that scammers now are simply claiming to be virtual-office lessees without actually renting space.

    But it gets even more disturbing than even that. Indeed, BCSC is alleging that SGI lulled investors who sought the return of their money by telling them that :

    • The investor owed U.S. taxes.
    • SGI was merging with another company.
    • The authorities were investigating the investor for money laundering because he made too much money too quickly.

    “One victim sent $13,000 to deal with the U.S. taxes but still did not get any money back,” BCSC said.

    In fact, BCSC said, “To date, not a single investor has recovered a cent from SGI.”

    SGI’s website “is no longer accessible,” BCSC said.

    Prior to going missing, BCSC said, the site claimed that:

    • It has been doing business since 1998 with clients in over 70 countries.
    • It trades commodities and foreign exchange.
    • It has a head office in Chicago.
    • Investors are in control of their money at all times.

    At least one investor sent SGI an additional $58,000 after being told that the initial purchase had earned huge returns, BCSC said.

    Coupled with the investigation in New York, the investigation in British Columbia may demonstrate that fraudsters not only are creating new and better ways to steal, but also are extorting money from their marks by using the names of government agencies and the names of specific crimes such as money-laundering to instill fear.

  • DEVELOPING STORY: CFTC Seeks Asset Freeze Amid Allegations Of Fraud Against Russell R. Wasendorf Sr. Of Peregrine Financial Group Inc.; Wasendorf Reportedly Attempted To Kill Himself Yesterday; Trevor Cook Ponzi Victims At Risk Of Getting Fleeced Twice

    EDITOR’S NOTE: The PP Blog first became aware of reports about the suicide bid of Russell R. Wasendorf Sr. last night, after being contacted by a reader who was defrauded in the Trevor Cook Ponzi scheme. Wasendorf apparently sought to take his own life on the sparkling Cedar Falls, Iowa, property of Peregrine Financial Group Inc., the company he founded in 1990 in Chicago. A deeply disturbing, multipronged mystery has emerged . . .

    ** ___________________________________ **

    Russell R. Wasendorf Sr.

    After a reported suicide bid yesterday, Russell R. Wasendorf Sr. is said to be comatose today. Regulators now say that more than $200 million in customer funds is missing from Peregrine Financial Group Inc. (PFG). By law, the customer money was supposed to have been segregated and separately accounted for.

    “The whereabouts of the funds is currently unknown,” the CFTC said today in a court filing in Chicago that accused Wasendorf and PFG of fraud and sought an asset freeze.

    Those alarming words followed on the heels of an emergency enforcement action yesterday by the National Futures Association, which alleged that Wasendorf “may have falsified bank records” to create the impression that PFG had about $400 million in segregated accounts in late June.

    Of the $400 million, $225 million purportedly was held at U.S. Bank.

    But when NFA checked with U.S. Bank yesterday, it learned that only about $5 million was on deposit, according to the emergency filing.

    Wasendorf is a member of NFA’s Futures Commission Merchant Advisory Committee with a term ending in February 2015, according to NFA’s website. He’s now effectively been accused of fraud by the same organization he purportedly served as a committee member.

    Whatever fraud was taking place at PFG, NFA and CFTC now say, appears to date back at least to February 2010. And that fraud, according to the NFA filing, appears to have carried over into both this year and last.

    PFG does business online as PFGBest at PFGBest.com. The website features a photo of PFG’s glistening headquarters building in rural Cedar Falls, Iowa.

    The building near the small city of about 40,000 nestled in America’s heartland, however, may belie the reality at PFG.

    In February 2012, R.J. Zayed, the court-appointed receiver in the Trevor Cook Ponzi scheme case in Minnesota, sued PFG. Among the allegations was that the company turned a blind eye to Cook’s Forex fraud and checkered history with NFA.

    Cook’s Ponzi scheme gathered about $194 million and rendered some investors destitute. About $30 million of that sum was lost in trading accounts at PFG, according to the receiver’s lawsuit.

    PFG, according to the lawsuit, permitted Cook to open, manage and maintain trading accounts “in the face of overwhelming red flags of fraud or insolvency.”

    Cook is now two years into a 25-year prison sentence for his Ponzi scheme, which has led to criminal charges and convictions of pitchmen Jason Bo-Alan Beckman, Gerald Durand and former radio huckster Pat Kiley.

    During the same month Zayed sued PFG, the company agreed to settle an earlier NFA complaint in which it was accused of failing to diligently supervise introducing brokers. One of the respondents in the case was Russell R. Wasendorf Jr., Wasendorf’s son. Wasendorf Jr. is the president and chief operating officer of PFGBest and founded its Forex division, according to the PFGBest website.

    The company agreed to pay $700,000 to settle the case with no acknowledgment of wrongdoing, according to NFA.

    About five months later, Wasendorf Sr. was accused of fraud. Details remain sketchy. It is unclear how much — if any — of the fraud for which he now stands accused is related to the Cook fraud.

    What is clear is that Cook himself  was in trouble at least two prior times with NFA, with the self-regulatory organization alleging in 2005 that he manipulated an elderly woman and caused her to liquidate a $100,000 annuity with which she already was earning an annual return of 8.75 percent.

    Cook told her she could earn more through him, according to the NFA complaint.

    NFA documentation in that case references an entity known as Private Financial Group which, curiously, also used the acronym PFG, the same acronym used by Peregrine Financial Group.

    Cook’s Ponzi scheme was exposed in 2009.

  • Illinois Forex Ponzi Schemers Get Combined Prison Sentences Of Nearly 30 Years; Feds Identify More Than 1,000 Victims Of $17 Million Swindle In Which $1 Million Went To ‘Strip Club And Restaurants’

    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.

  • URGENT >> BULLETIN >> MOVING: CFTC Files Actions In Utah, Wyoming, New York And Illinois Against Domestic AND Offshore Firms In Second Phase Of Forex Sweep; 11 Companies Accused Of Illegally Soliciting U.S. Customers

    URGENT >> BULLETIN >> MOVING:

    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.”

    Registrations can be checked through the National Futures Association.

    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.

    Here is a link to a CFTC page through which all of today’s complaints can be accessed. (Look on the right side of the page.)

     

  • BULLETIN: Vincent McCrudden Pleads Guilty To Threatening Regulators, Government Officials

    BULLETIN: Vincent McCrudden, who was arrested in January amid allegations he threatened to kill 47 regulators and government officials, has pleaded guilty to two counts of transmitting threats to kill.

    McCrudden, 50, faces up to 10 years in prison. He has been jailed since his arrest in New Jersey.

    “Mr. McCrudden made bone-chilling and graphic threats against dozens of public officials,” said Assistant Attorney General Lanny Breuer. “As this prosecution reflects, the Department of Justice will act swiftly to identify and prosecute anyone who attempts to retaliate against public officials. Public servants must be able to carry out their duties without fear of being targeted.”

    On Sept. 30, prosecutors said, McCrudden sent an email to an employee of the National Futures Association (NFA) that made a death threat.

    “[I]t wasn’t ever a question of ‘if’ I was going to kill you, it was just a question of when,” the email read, prosecutors said. “And now, that question has been answered. You are going to die a painful death.”

    McCrudden also published an “Execution List” on his website. The list included the names of 47 current and former officials of the SEC, FINRA, NFA, and CFTC.  Included on the list were the names of the “the Chairperson of the SEC, the Chairman of the CFTC, a former Acting Chairman and Commissioner of the CFTC, the Chairman and CEO of FINRA, the former chief of Enforcement at FINRA, and other employees of the NFA and CFTC,” prosecutors said.

    “[T]hese people have got to go,” McCrudden wrote, prosecutors said. “And I need your help, there are just too many for me alone.”

    And McCrudden “posted a $100,000 reward on his website for personal information of several government officials and proof that those officials were punished,” prosecutors charged.

    On Dec. 16, according to the complaint, McCrudden sent a CFTC official an email with a subject line of, “You corrupt mother[*!&$$%]!”

    A top FBI official said such behavior would not be tolerated.

    “The conduct of McCrudden was way beyond mere speech,” said Janice K. Fedarcyk, assistant director in charge of the agency’s New York office. “By his admission, he not only directly threatened to kill government and regulatory officials, but he also listed dozens of officials and offered a reward to others to kill them. This outrageous conduct is not only dangerous, but an affront to civil society.”

    Fedarcyk was backed by U.S. Attorney Loretta E. Lynch of the Eastern District of New York.

    “This defendant crossed the line when he directly threatened to kill public officials who were working to keep our financial markets fair and open, and invited others to join him,” Lynch said. “He thought he could hide in the shadows of the Internet and disseminate his threats and instructions. He was wrong. This office will not tolerate, and will vigorously prosecute, those who threaten to kill men and women who dedicate their lives to public service.”

  • BREAKING NEWS: FLORIDA — AGAIN: CFTC Says Sammy J. Goldman, Harry Robert Tanner Jr. And Their Firm Ran $23 Million ‘Precious Metals’ Scam; Case Is Third Such Action In 7 Weeks

    BULLETIN: In the third such action in the United States since March 30, the CFTC has gone to federal court in Florida to block what it described as a “precious metals” scam that incorporated fictitious trading.

    Charged with fraud in the case were Sammy J. Goldman of Delray Beach, Fla., and Harry Robert Tanner Jr. of Lake Worth, Fla. Their Florida-based firm — American Precious Metals LLC (APM) — also was charged.

    Tanner was the subject of two previous actions by the National Futures Association for misconduct and was permanently barred by NFA in 2006, the CFTC said.

    Goldman, also has been the subject of regulatory actions, according to records.

    The CFTC case was filed under seal May 10. Investigators today described APM’s operations it as a “massive fraudulent scheme” that purportedly gathered more than $23 million since July 2007 as part of a “boiler room”telemarketing scam.

    APM’s website has been seized by the court-appointed receiver, David R. Chase. U.S. District Judge William Zloch is presiding over the case and issued a Temporary restraining Order after the CFTC filed an emergency petition.

    The CFTC’s allegations read like an impossible work of fiction.

    APM purported to offer a “Leveraged Precious Metals Investment Program” through which the firm sold metal to customers and arranged financing through a firm known as Global Asset Management (GAM), which purportedly received “interest,” the CFTC said.

    The metal purportedly was stored in “independent depository,” the CFTC said.

    Along the troubles with the claims was APM did “not purchase or sell physical precious metals on behalf of its leverage program customers,” the agency charged.

    “Further, APM does not arrange for or provide loans for the purchase of physical precious metals by its customers,” the agency continued. “APM customers have no physical precious metals stored in any independent depository, and since no loan has been disbursed, no interest accrues on any loan.”

    Here is what actually happens through the boiler room, the CFTC charged.

    “[A]fter charging commissions of approximately 40% of customers’ funds, APM sends customer funds to GAM, which also does not purchase or sell physical precious metals on behalf of APM leverage program customers.

    “Instead,” the agency alleged, “GAM pools the funds received from APM with funds received from similar boiler room telemarketing firms, takes a portion of the funds as its own profit, and deposits the rest in margin accounts held in GAM’s name with various United Kingdom-based firms where GAM trades over-the-counter (‘OTC’) precious metals derivatives. APM discloses none of GAM’s actual activity to its customers.”

    Customers further get ripped off through “enormous commissions” APM takes off the top, along with a “3-5% mark-up on the price of the physical precious metals purportedly sold to the customer, account opening fees and the monthly ‘interest’ GAM charges on the financing purportedly provided to the customers,” the CFTC charged.

    How corrupt was the scheme?

    “[A]s of January 7, 2010, APM’s approximately 396 then-existing leverage program customers purportedly owned gold, silver, platinum, and palladium with a total value of $23,834, 108,” the agency said.

    However, “neither APM, GAM nor any secure depository held any physical precious metals for those customers,” the CFTC charged.

    “When a customer makes an order to purchase precious metal, APM simply records the transaction on paper and deducts an ‘administrative fee’ equal to 15% of the total value of the metal being purchased, which is equivalent to approximately 40% of the customer’s total cash outlay,” the CFTC charged. “APM divides the administrative fee among the firm’s management personnel and the employees responsible for soliciting the customer. APM pools the remaining customer funds in APM’s own bank accounts with funds received from other customers and sends a portion of its pooled customer funds to GAM on a weekly basis.”

    Separately, the Federal Trade Commission has charged Tanner and his wife, Andrea Tanner, with telemarketing fraud.

  • BULLETIN: Feds, CFTC File Stunning Allegations Of Multimillion-Dollar Fraud Against Purported Forex Trader Who Filed Bizarre Documents In NFA Disciplinary Case; Lyndon Lydell Parrilla Arrested In California

    A California man who allegedly once defended himself in a disciplinary case by advising the National Futures Association that he was “a living breathing free Man upon the free soil” and an “American citizen of the American Republic” has been arrested by federal agents on charges of defrauding investors of $5 million in a Forex scheme.

    Lyndon Lydell Parrilla, 31, of Los Angeles, was arrested yesterday. He also was sued by the CFTC, and the allegations surrounding his business practices are stunning.

    NFA booted Parrilla in 2009 after bringing a disciplinary action against him and receiving nonresponsive answers to its complaint, according to records. Parrilla once was associated with a firm known as Parman Financial.

    In response to the NFA  inquiry, Parrilla allegedly submitted documents styled “Public Notice, Declarations, and Lawful Protest and Private Pure Trust Act of State,” NFA said.

    These, according to NFA records, were among his alleged assertions:

    • “Lyndon Lydell Parrilla is a living breathing free Man upon the free soil, an American citizen of the American Republic, beneficiary of the Original jurisdiction.”
    • “Lyndon Lydell Parrilla is not a United States Citizen, subject, vessel or ‘person’ as defined in Title 26 of the United States Code.”
    • “As beneficiary to the Original Jurisdiction, He is not subject to nor does HE volunteer to submit to or contract with any ens legis artificial or corporate jurisdiction to which a United States person may be subject.”

    Federal prosecutors in Boston now say Parrilla was running a $5 million Forex scam in which he withdrew $2.1 million in cash from customers accounts, spent $950,000 at casinos and bought a car for $130,000. He was specifically charged with wire fraud. Elements of the case were assembled by the Interagency Financial Fraud Enforcement Task Force created by President Obama in November 2009.

    The scam allegedly operated through a company known as Green Tree Capital, which used a website and addresses in California, Las Vegas, Boston and Canada, including the cities of Montreal London and Piedmont, according to court records.

    For its part, the CFTC said Green Tree created bogus records of its trading prowess, including “a false 33-page track record from an account that claims Green Tree achieved gains of 1000% from January 19, 2009, through February 26, 2010.”

    The company also used at least one dummy address in California, the CFTC charged.

    “Green Tree misrepresents its location on its website,” the CFTC charged.  “The website claims that Green Tree’s main office in the United States is located at 9701 Wilshire Boulevard, 10th Floor, Beverly Hills, California, and lists a phone number for that office.

    “However,” the CFTC continued, “the purported office address is fictitious, and Green Tree uses an answering service named Ruby Receptionists located in Portland, Oregon, to answer the phone number for its purported office in Beverly Hills.”

    There even is doubt that Green Tree had an office in Boston, according to the CFTC.

    A company known as FX High Summit (FXHS) is listed in the CFTC complaint as a “related entity,” but is not named a defendant.

    FXHS “holds itself out as a forex trading firm and purportedly is located in Quebec, Canada and/or Ireland,” the CFTC said.

    Discussions in online forums include complaints that FXHS also disappeared with money.

    Law enforcement and regulators have been squaring off against bizarre pleadings in securities and commodities cases. Some individuals charged in cases have made bizarre claims they are “sovereign” beings answerable only to God.

    There also have been bizarre claims that U.S. criminal and regulatory laws do not apply to accused criminals and fraudsters, even if the crimes or offenses occurred in the United States.

  • BULLETIN: Bench Warrant Issued For Ponzi Schemer Who Ran Commodities Caper, Ripped Off Condo Association To Keep Scheme Afloat And Appeared On CNBC As Trading Analyst, CFTC Says

    Brian Kim appeared on CNBC repeatedly and offered commentary on Asian derivatives and other matters, according to a photo exhibit in the CFTC case filed today and information published on Kim's website.

    BULLETIN: A federal judge has frozen the assets of a trader and television analyst charged criminally by a New York County grand jury with multiple felonies in an alleged commodity-pool Ponzi scheme and charged civilly by the U.S. Commodity Futures Trading Commission in the same caper.

    Brian Kim, 35, is a “fugitive,” declared Manhattan District Attorney Cyrus R. Vance Jr., noting that the criminal and civil charges announced today were not Kim’s first encounter with the law.

    Indeed, Vance said, Kim failed to appear for his January trial in New York State Superior Court after being charged in late 2009 with stealing $430,000 from Christadora House, the New York condominium complex at which he resided.

    In the civil filings today, the CFTC accused Kim of taking the money from the condo association by forging documents and using the cash to keep his long-running fraud scheme afloat. The theft allegedly occurred in June 2008, months prior to appearances Kim made on an American television network to offer commentary on issues such as the Dubai debt crisis, derivatives trading in Asia and so-called “dark pools” that provide institutional investors outlets to trade anonymously in murky conditions.

    The commodities scheme continued while Kim was free on bail and awaiting trial on the charges of ripping off the  condo association, the CFTC charged, alleging that Kim also lied to the National Futures Association about his business practices.

    “The defendant induced his clients to make risky and speculative investments by portraying himself as an accomplished trader and money manager,” said Vance. He added that a bench warrant has been issued for Kim’s arrest.

    It was not immediately clear if either Vance or the CFTC knew Kim’s current whereabouts. Manhattan investigators said he stole about $4 million from “at least” 45 investors.

    Vance is the current, real-life embodiment of the fictitious Manhattan district attorney portrayed on the long-running “Law & Order” crime drama on the NBC television network. Adding to America’s real-life Ponzi drama and its often bizarre nature, Kim has appeared multiple times on CNBC, a prominent business channel, as an expert financial commentator.

    Kim, the operator of a hedge fund known as Liquid Capital Management LLC, appeared on CNBC at least three times in 2009, according to his website.

    While reporters were asking Kim to analyze marketplace developments and share his thoughts with the TV audience, he was at the helm of a complex, ongoing Ponzi and fraud scheme and presiding over a cover-up, according to court filings.

  • Federal Judge Grants Asset Freeze In Bizarre Fraud Case That Allegedly Mixed A Forex Ponzi Scheme With A Cash-Gifing And Tax Scheme; Arizona Resident Anthony Eugene Linton Promised Software System Let Customers ‘Profit Every Time’, CFTC Charges

    The assets of an Arizona man who allegedly mixed a Forex Ponzi scheme with a cash-gifting scheme and claimed his software system let clients “profit every time” from trades have been frozen by a federal judge after the CFTC filed an emergency court action.

    Anthony Eugene Linton of Tucson told investors that entrusting their money to him posed “no risk whatsoever” because of his miraculous trading abilities, personal wealth and software system, the CFTC charged.

    Some customers were told their profits under Linton were not taxable because the enterprise was structured as a “tax free gift plan in which participation interests would be considered to be gifts” to Linton’s company, known as “The Private Trading Pool” (PTP).

    Returns from PTP were positioned as “gifts” back to participants, “with the result that the transactions would not have to be disclosed to the Internal Revenue Service . . . and would be considered ‘tax free’ by the IRS,” CFTC charged.

    Linton told one whopper after another, CFTC said.

    “[W]hat little forex trading Linton did using customer funds resulted in consistent net losses, and, in the aggregate, he lost more than 90 percent of the funds traded,” CFTC charged.

    When the scheme began to unravel, CFTC charged, Linton blamed purported “new restrictions” on Forex trading imposed by the U.S. Congress and the National Futures Association (NFA) for his inability to make payments, CFTC charged.

    He also told some investors that a “Permanent Injunction” placed against him in his divorce case prevented him from making payments, CFTC charged.

    The alleged scheme gathered at least $650,000 from at least 19 investors. Some of the funds were used in Ponzi scheme fashion, CFTC said.

    Linton also used customer funds to make his “personal mortgage, car and credit card payments,” CFTC charged.

    At the same time, he used customer funds “to buy and sell items on Ebay and converted large sums of customer funds into cash and stashed it in a safe in his home,” CFTC said.

    U.S. District Judge David C. Bury ordered the asset freeze.