BILLION-DOLLAR INVESTMENT SCAMMER SENTENCED TO 10 YEARS IN PRISON

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION  
Paul Greenwood Sentenced to 10 Years in Federal Prison for Billion-Dollar Investment Scam

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Paul Greenwood of North Salem, New York, who operated a $1.3 billion investment scam where he and a co-Defendant misappropriated at least $554 million from commodity pool participants, was sentenced to 10 years in federal prison for charges related to his participation in the scam. Earlier, on July 28, 2010, Greenwood pled guilty to a six-count criminal indictment on the charges, including a commodities fraud charge in violation of the Commodity Exchange Act (CEA).

The criminal charges arose from Greenwood’s solicitation fraud and misappropriation of pool participant funds, as charged in a Complaint filed by the CFTC on February 25, 2009 (see CFTC Press Release 5621-09) and a companion Complaint filed by the Securities and Exchange Commission. According to findings in Consent Orders entered earlier in the CFTC case, from at least 1996 to 2009, Greenwood and a co-Defendant solicited more than $7.6 billion from institutional investors, including charitable and university foundations and pension and retirement plans through Westridge Capital Management, WG Trading Investors, LP, and other entities. The Defendants defrauded victims by falsely depicting that all pool participants’ funds would be employed in a single investment strategy that consisted of index arbitrage. However, pool participants’ funds were transferred to another entity from which Greenwood and the co-Defendant siphoned funds.

Of the approximately $554 million in pool participants’ funds misappropriated, over $130 million was used for Greenwood and the co-Defendant’s personal expenses, including purchasing rare books, horses, and Steiff teddy bears for as much as $80,000.

In a sentencing letter filed with the Court in the criminal proceeding, the U.S. Attorney’s Office for the Southern District of New York acknowledged that Greenwood had cooperated and had provided substantial assistance to the government and the court-appointed receiver in the CFTC and SEC cases. The receiver’s efforts to marshal assets to date have resulted in the recovery of over $900 million dollars, or close to 90 percent of investors’ claims.

Aitan Goelman, the CFTC’s Director of Enforcement, stated: “The sentence in this case should serve as a warning that those who willfully violate the CEA face the very real chance of a significant term of imprisonment. The CFTC will continue its vigilance in protecting commodities and derivatives investors from fraud and other forms of financial crime.”

The CFTC greatly appreciates the assistance of the National Futures Association, the office of the U.S. Attorney for the Southern District of New York, the Federal Bureau of Investigation, and the Securities and Exchange Commission.

The following CFTC Division of Enforcement staff members are responsible for this matter: Patricia Gomersall, Kyong Koh, JonMarc Buffa, Peter Haas, Joan Manley, and Paul Hayeck.

SEC SUSPENDS TRADING IN EBOLA RELATED COMPANIES

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION
11/20/2014 10:30 AM EST

The Securities and Exchange Commission today suspended trading in four companies that claim to be developing products or services in response to the Ebola outbreak, citing a lack of publicly available information about the companies’ operations.

The SEC simultaneously issued an investor alert warning about the potential for fraud in microcap companies purportedly involved in Ebola prevention, testing, or treatment, noting that scam artists often exploit the latest crisis in the news cycle to lure investors into supposedly promising investment opportunities.

The SEC Enforcement Division and its Microcap Fraud Task Force work to proactively identify microcap companies that are publicly disseminating information that appears inadequate or potentially inaccurate.  The SEC has authority to issue trading suspensions against such companies.  The companies whose trading was suspended today are Patchogue, N.Y.-based Bravo Enterprises Ltd., Monrovia, Calif.-based Immunotech Laboratories Inc., Toronto-based Myriad Interactive Media Inc., and Anaheim, Calif.-based Wholehealth Products Inc.

“We move quickly to protect investors when we see thinly-traded stocks being promoted with questionable information that make them ripe for pump-and-dump schemes,” said Elisha Frank, Co-Chair of the SEC Enforcement Division’s Microcap Fraud Task Force.  “Fraudsters are constantly exploiting issues of public concern to tout a penny stock company supposedly in the business of addressing the latest crisis.”

Under the federal securities laws, the SEC can suspend trading in a stock for 10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met.  More information about the trading suspension process is available in an SEC investor bulletin on the topic.

According to the SEC’s investor alert, similar to how natural disasters such as Hurricane Katrina and Hurricane Sandy have given rise to investment schemes for companies purportedly involved in cleanup efforts, con artists may perpetrate investment scams related to Ebola prevention or treatment efforts.  The alert suggests that investors be wary about promises or guarantees of high investment returns with little or no risk, avoid solicitations with pressure to “buy RIGHT NOW,” and beware of unsolicited investment offers through social media.

FTC TESTIFIES BEFORE SENATE COMMITTEE REGARDING PRECIOUS METALS INVESTMENT SCAMS

FROM:  FEDERAL TRADE COMMISSION 

FTC Testifies on Precious Metals Investment Scams Before Senate Special Committee on Aging

In testimony before Congress, the Federal Trade Commission described its efforts to stop precious metals investment scams and inform consumers how to avoid them.

Testifying on behalf of the Commission before the Senate Special Committee on Aging, Dama Brown, Director of the FTC’s Southwest Region, said the agency is committed to protecting consumers from investment schemes that swindle money from people and often prey on older Americans’ concerns about the security of their retirement savings, particularly during periods of economic uncertainty.

Following the economic downturn in 2008, the testimony states, the FTC observed a proliferation of schemes that targeted financially-distressed consumers, including telemarketers offering precious metals as purported high-profit, low-risk investments. FTC cases have alleged that, to lure consumers into purchasing these investments, telemarketers claimed that the precious metals investments were certain to rise in price and the investments were safe because they were backed by physical metal.

According to the Commission, in reality, the telemarketers offered a highly leveraged, high-risk investment. Telemarketers allegedly failed to disclose that consumers were financing most of the investments’ purchase price and they were required to pay hefty fees. The terms of the investments rendered them highly risky and largely unprofitable.

The Commission recently filed three law enforcement actions involving precious metals investment schemes, the testimony states. In addition to stopping the alleged scams, the Commission expects to return approximately $5 million to consumer victims. The testimony describes the schemes, the agency’s law enforcement actions, and its consumer education efforts, including providing information about how to avoid scams, what to know before investing in precious metals, coins, or other investments, and practical investment advice.

The Commission vote approving the testimony and its inclusion in the formal record was 4-0.

For information about investing in precious metals, read Investing in Gold, Investing in Bullion and Bullion Coins, and Investing in Collectible Coins.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.