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Tag: U.S. Commodity Futures Trading Commission

  • 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.




  • BREAKING NEWS: Arrests Made In Westridge Capital Management Case; FBI Alleges Massive Fraud

    Paul Greenwood
    Paul Greenwood

    UPDATED 7:18 P.M. EST (U.S.A.) The FBI has made arrests in the Westridge Capital Management case.

    Paul Greenwood and Stephen Walsh, principals in WCM and an arm known as WG Trading of Greenwich, Conn., both were arrested. WCM is headquartered in Santa Barbara, Calif.

    Greenwood and Walsh were arraigned this afternoon in New York. Bail was set at $7 million each.  They were freed pending a March 11 hearing before which they’ll need to demonstrate that they have at least $1 million in cash or property not connected to fraud.

    Authorities said they ran a huge financial scheme, converting tens of millions of client dollars to their own use.

    Included in the purchases were $80,000 Steiff Teddy bears at various auctions, including auctions at Sotheby’s, authorities said. A $3 million home also was purchased for Walsh’s ex-wife.

    Greenwood is the town supervisor of North Salem, N.Y., on the Connecticut border. He did not attend the community’s regular council meeting last night and has ducked media and financial investigators for days.

    Greenwood and Walsh were accused of securities fraud, wire fraud and conspiracy. They were sued last week by Carnegie Mellon University and the University of Pittsburgh amid fears that $114 million had been lost as a result of massive fraud.

    The Iowa Public Employees Retirement System (IPERS) severed its contract with WCM earlier this week, on the heels of the action by CMU and Pitt and in the wake of the suspension of Greenwood and Walsh from the National Futures Association for stonewalling during an audit.

    IPERS entrusted $339 million to WCM.

    Below are snippets from the federal criminal complaint, which accuses Greenwood and Walsh of using clients’ money to make personal purchases and transferring clients’ money to family members. Walsh, according to the complaint, made at least two transfers of $500,000 each to a bank account in the name of his wife.

    “From time to time, PAUL GREENWOOD and STEPHEN WALSH, the defendants, directed [an] Employee to wire funds from the Account to their own bank accounts, bank accounts in the name of their family members, and bank accounts of other persons and entities to pay for personal expenditures of GREENWOOD and WALSH that were unrelated to the business of WG Investors.

    “The Employee recalled effecting transfers to pay for, among other things, the following: (a) the purchase of expensive collectible items by GREENWOOD; (b) the purchase of horses by GREENWOOD; (c) transfers of cash to WALSH’s then-wife; and (d) transfers of cash for the purchase of an apartment for WALSH’s ex-wife pursuant to a divorce settlement,” said FBI agent James C. Barnacle Jr., in the complaint.

    Greenwood converted a farm once owned by the late actor Paul Newman into a horse-show center and was credited by North Salem residents as a responsible public steward.

    In secret, according to the FBI, Greenwood and Walsh were running a criminal financial enterprise.

    “At the beginning of each calendar year,” Barnacle said, “the Employee added up the transfers that GREENWOOD and WALSH had directed for their personal benefit and prepared a promissory note for GREENWOOD and WALSH to sign that included the amounts of money that GREENWOOD and WALSH had taken from the Account.

    “From time to time,” Barnacle said, “GREENWOOD directed the Employee to understate the losses reported to investors and include a portion of the losses in the promissory notes executed by GREENWOOD and WALSH. Thus, the GREENWOOD Notes and the WALSH Notes include amounts reflecting funds misappropriated for the personal benefit of GREENWOOD and WALSH and losses fraudulently hidden from investors.”

    Hundreds of millions of dollars cannot be accounted for.

    Invesigators called it a $1.3 billion scam. In a separate action, the Commodity Futures Trading Commission charged Greenwood, Walsh and others with fraud.

    “[The] Defendants treated investor money — some of which came from a public pension fund — as their own piggy bank to lavish themselves with expensive gifts,” said Stephen J. Obie, CFTC’s acting director of enforcement.

    Read the statement by the FBI and Acting U.S. Attorney Lev Dassin of the Southern District of New York.

    See this Bedford Magazine article in which Greenwood declares he has the largest collection of Steiff stuffed animals in the world.

    “Noah had nothing on us,” Greenwood told the publication. He claimed to own 1,350 Steiffs.

  • Words That Should Become The New ‘Shot Heard ‘Round The World’ Spoken By Former CFTC Enforcement Chief

    By coincidence the words appear in the 13th paragraph of a Chicago Tribune story invoking investors’ sustained lack of luck and reporting on a new series of Ponzi schemes the U.S. Commodity Futures Trading Commission is investigating.

    The words were spoken by Gregory Mocek, former CFTC enforcement director, and are the most important words spoken to date during the financial meltdown. They should be the new “Shot heard ’round the world.”

    Ponzi schemes involving foreign currency trading have been so rampant they could “eat up all of the commission’s investigation and litigation resources, and there will be nothing left to protect the integrity of legitimate markets,” Mocek told the newspaper.

    It’s the problem in a nutshell. With great economy and not an ounce of hyberbole, Mocek defined the problem. As always, the question is, “Will anybody listen?”

    Give Them Big Guns And A Camera

    Regulators need the financial equivalent of automatic weapons provided the DEA when drug dealers switched from 38s to Uzis. They need bigger budgets, more enforcement staff, more computers, more laptops, more training, more undercover agents, more political support, less criticism and tools that work. At the same time, they need better PR skills, more news savvy and the power of arrest. They need cameras to take mugshots, a website that publishes the mugshots, and the ability to explain the arrest in nontechnical terms.

    To the best of our knowledge, no federal law-enforcement agency provided photos of Bernard Madoff or R. Allen Stanford, despite the extraordinary allegations against them. The public needs those photos. The media need those photos. Bloggers need those photos. Webmasters need those photos. It’s a key step in getting this cancer under control. The Sarasota County Sheriff’s office provided a photo of Arthur Nadel. Why can’t federal agencies do the same?

    Clean Up The Internet

    It is a mistake of grand proportions to assume the Ponzi problem and the financial skullduggery exist only in the brick-and-mortar world, that the practitioners exclusively wear suits, read the Wall Street Journal and shuttle from appointment to appointment in fine rides like Madoff or Stanford.

    Indeed, many of the most egregious offenders don’t have well-known names, spend much of the day in their underwear, read Internet boards as opposed to the Journal, don’t have appointments that even resemble anything traditional and don’t even leave their homes — not even to go to the bank.

    They are destroying wealth. They are sucking hundreds of millions of dollars out of the economy, perhaps even billions of dollars. Their ability to accumulate wealth at the expense of others has nothing to do with skill and has everything to do with timing: They read High Yield Investment Program (HYIP) and “autosurf” boards on the Internet, send email to their followers when they spot an opportunity, fund their purchases via wire transfer through Canada and, when it’s time to take their “profits,” they take them by wire transfer and deposit them in banks via ACH.

    At this very minute, hundreds of HYIPs and autosurfs are selling unregistered securities to U.S. residents and are using virtually pure Ponzi models to do it. They’re advertising huge returns — 30 percent a month and even 144 percent in 12 days — while stressing in U.S. English that they are safe opportunities and outside the reach of U.S. law enforcement in places such as Panama and Uruguay.

    Because they use U.S. English and their websites can be copied, nonEnglish-speaking criminals and people who speak limited English as a second language are simply cutting and pasting content, starting their own HYIPs and autosurfs, paying off members to instill early trust — and then vanishing with U.S. dollars when they’ve met their criminal target.

    And then starting all over again.

    They need only about $400 to steal tens of millions of dollars. If they already own the php script, their investment shrinks to the price of a domain name, a hosting account for a month or two and their time.

    Canadian companies used by the criminals include AlertPay and SolidTrustPay. These companies are permitting money-laundering by turning a blind eye to it. If they do take an overt step to instill client discipline, they get targeted by DDOS attacks that knock their servers offline.

    PayPal won’t touch this business. Much of it went to Canada when the United States put an end to eGold’s love affair with customers who laundered money through the system.

    A surf known as “MegaLido” is a case in point. No one other than the operator knows for certain where MegaLido was located. It came to life in the aftermath of the government seizure of nearly $100 million from Florida-based AdSurfDaily Inc. amid Ponzi allegations, and even was promoted by ASD members. MegaLido used AlertPay and SolidTrustPay, recruited an estimated 27,000 members, collected money from the members — and then simply vanished.

    It looks as though it had a partner in the crime — a surf known as Instant2U — which also fled with money it collected. AlertPay and SolidTrustPay reportedly are providing partial refunds from money the criminal surfs left in the system, but it wasn’t enough to make “investors” whole.

    See this post. And see this post.

    AlertPay suffered a DDOS attack during the process and was knocked offline.

    Forex scheming also is a big part of these games. CFTC, the SEC, the FBI, the IRS and prosecutors need tools. They need political clout behind them. It is clear that the American people have had it with Ponzi schemes and massive financial fraud. There never has been a better time for politicians to curry favor with voters by blasting these schemes back to the Stone Age.

    The new “Shot heard ’round the world’ should be plugged into one of the bailout packages because it provides exceptional value for taxpayers, exquisite headlines for politicians and exceptional tools for law enforcement to nuke these operations and stem the flow of poison.

    At the moment, advocates for Ponzi schemes — yes, the schemes have advocates and even crackpots who want to sue the government for enforcing existing laws — are sending letters to Sen. Patrick Leahy.

    They want Leahy, chairman of the Senate Judiciary Committee, to investigate the prosecutors and the U.S. Secret Service for breaking up the ASD Ponzi scheme. Some of the very same people are promoting offshore scams in Panama and Uruguay.

    It is time to nuke these miserable businesses. Gregory Mocek laid out the problem, and he couldn’t be more right.

    Fire the shot.

    Read the Chicago Tribune story.