Showing posts with label FOREX FRAUD. Show all posts
Showing posts with label FOREX FRAUD. Show all posts

Friday, April 4, 2014

FLORIDA COUPLE, COMPANY ORDERED TO PAY $5.76 MILLION FOR FOREX FRAUD

FROM:  COMMODITY FUTURES TRADING COMMISSION 
Federal Court Orders St. Augustine, Florida Couple and Their Company to Pay $5.76 Million for Defrauding Customers in Foreign Currency Scheme

Queen Shoals Consultants, Gary D. Martin, and Brenda K. Martin Charged in March 2011 CFTC Anti-Fraud Action

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) obtained federal court supplemental consent Order requiring Defendants Gary D. Martin and Brenda K. Martin of St. Augustine, Florida, and their company, Queen Shoals Consultants, LLC (QSC) of Charlotte, North Carolina, to jointly pay a total of $5.76 million in civil monetary penalties for defrauding customers through a retail foreign currency (forex) trading scheme (see CFTC Press Release and Complaint 6004-11, March 17, 2011). None of the Defendants has ever been registered with the CFTC.

Specifically, the supplemental Order, entered on May 14, 2013, by Chief Judge Robert Conrad, Jr., of the U.S. District Court for the Western District of North Carolina, requires QSC and Gary Martin to pay a civil monetary penalty (CMP) of $4,320,000 and Brenda Martin to pay a $1,440,000 CMP. The Defendants’ CMP obligation and post-judgment interest shall be joint and several, according to the supplemental Order.

In 2011, the Court Entered a Consent Order of Permanent Injunction

Earlier, on August 1, 2011, Judge Conrad entered a consent Order of permanent injunction against the Defendants (see CFTC Press Release and Order 6090-11), finding that the Defendants defrauded customers in the forex scheme. The Order requires that the Defendants make full restitution “to all persons who gave funds, either directly or indirectly, to Defendants as a result of the course of the illegal conduct” charged in the CFTC Complaint. The Order also required the Defendants to pay a CMP to be determined at a later date.

According to the Order, a website created by the Martins “lured customers by claiming QSC and the Martins had a ‘vast background in financial services’ with over 20 years of experience in financial services and a staff of experts ready to assist customers.” In reality, however, the Defendants had no expertise or experience in trading forex, and all of the representations concerning trading, guaranteed profits, and profitable accounts were false. Furthermore, Gary Martin admitted under oath that the Defendants never engaged in any forex trading or investing on behalf of customers and that there were no forex accounts, according to the Order.

The CFTC’s Complaint charged, among other things, that the Martins, unknown to customers, turned over all customer funds to Sidney S. Hanson of Charlotte, North Carolina, an undisclosed third party, in return for a referral fee of up to five percent of each customer’s initial and subsequent investment. Hanson allegedly paid the Martins at least $1.44 million in such undisclosed referral fees. On August 4, 2009, the CFTC charged Hanson and other Defendants with operating a Ponzi scheme involving more than $22 million in connection with off-exchange forex trading (see CFTC Press Releases 5689-09, August 7, 2009, and 6133-11, November 1, 2011). Hanson pleaded guilty to securities fraud and mail fraud in the criminal matter (United States v. Sidney Stanton Hanson, Case No. 09-CR-09CR139-RJC (U.S. District Court for the Western District of North Carolina)) for acts arising out of his operation of the Queen Shoals Group, among other entities. Hanson was sentenced on April 1, 2011, to 22 years in prison and ordered to pay $33 million in restitution to victims of the Ponzi scheme.

The CFTC appreciates the assistance of the State of North Carolina Department of the Secretary of State, Securities Division.

CFTC Division of Enforcement staff members are responsible for this case are Timothy J. Mulreany, Michael Amakor, and Paul Hayeck.

Monday, September 17, 2012

ALLEGED FOREX FRAUD UNCOVERED

FROM: U.S. COMMODITY FUTURES TRADING COMMISSION

CFTC Charges Florida Resident William Jeffery Chandler with Forex Fraud and Misappropriation

Federal court enters emergency order freezing defendant’s assets and protecting books and records

Washington, DC
– The U.S. Commodity Futures Trading Commission (CFTC) today announced that on September 11, 2012, Judge James D. Whittemore of the U.S. District Court for the Middle District of Florida entered an emergency order freezing the assets of defendant William Jeffery Chandler of Ft Myers, Fla. The court’s order also prohibits Chandler from destroying or altering books and records. The judge set a hearing on the CFTC’s motion for a preliminary injunction for September 26, 2012.

The court’s order arises out of a civil enforcement action filed by the CFTC on September 10, 2012, charging Chandler with foreign currency (forex) fraud and misappropriation. Chandler has never been registered with the CFTC in any capacity, according to the complaint.

The CFTC complaint alleges that, since at least July 2010, and continuing to the present, Chandler has solicited at least six individuals to contribute at least $773,100 to a pooled account to trade off-exchange forex contracts in Chandler’s account at Dukascopy Bank SA, a Switzerland-domiciled bank. To entice prospective pool participants to invest, Chandler allegedly guaranteed a two percent to 12.5 percent monthly return on participants’ principal.

However, according to the complaint, Chandler’s Dukascopy Bank account was closed on or about July 15, 2011, due to changes in U.S. regulations. The Dukascopy Bank account was transferred to Alpari US LLC, a U.S.-based registered Retail Foreign Exchange Dealer, on August 8, 2011, according to the complaint. At that time, the pooled account allegedly had a balance of only $292.49, far less than the amount contributed by pool participants.

Chandler allegedly continues to solicit and receive funds from pool participants to trade in his Dukascopy Bank account, even after it had closed, and continues to represent to pool participants that their funds remain in the pool in his Dukascopy Bank account. Although Chandler has received requests from many pool participants to return their funds, he refuses to refund participant’s principal, instead asserting a litany of fabricated excuses, according to the complaint. Chandler has misappropriated the vast majority of the pool’s funds for his personal use, the complaint charges.

Furthermore, pool participants received statements from a purported accounting firm named A.R. Watkins; however, upon information and belief, A.R. Watkins is a fictitious entity controlled by Chandler, according to the complaint.

In its continuing litigation, the CFTC seeks civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains, trading and registration bans, and preliminary and permanent injunctions against further violations of the Commodity Exchange Act and CFTC regulations, as charged.

The CFTC appreciates the assistance of the Pasco County Sheriff’s Office.

CFTC Division of Enforcement staff responsible for this case are Jo Mettenburg, Jeff Le Riche, Stephen Turley, Rick Glaser, and Richard Wagner.

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