Regulator Focus on Forex Continues
This month the Commodity Futures Trading Commission announced a new development
in a series of enforcement actions against fraud related to foreign exchange
trading. The regulator has been going after forex schemes since 2009.
The latest is a summary judgment in a federal court against Marvin Cooper and
his company, Billion Coupons, of Honolulu, Hawaii. According to the CFTC, Mr.
Cooper operated a $4 million foreign currency and commodity futures Ponzi scheme
that defrauded more than 125 customers, prying in particular on the deaf.
He solicited money from deaf American and Japanese individuals, with promises of
15% to 25% monthly returns from trading forex, the regulator alleges. He is also
accused of misappropriating customers' funds for personal use, including
payments for flying lessons and a $1 million house. Mr. Cooper is himself deaf.
The court ordered him and Billion Coupons to pay $6.2 million in disgorgement
and civil penalties.
Pastor Accused of Scheme
Another alleged forex scheme emerged in August. The CFTC obtained an
emergency court order freezing assets held by Jeremiah Yancy of Atoka, Oklahoma,
and his company, Longbranch Group International LLC of Houston, Texas. The court
order also granted the CFTC immediate access to the defendants' books and
Mr. Yancy allegedly operated a Ponzi scheme claiming to invest in off-exchange
foreign currency contracts and solicited more than $1 million from at least 36
people, including members of the church in which he was pastor. He told
potential customers that he managed forex trading for non-profit organizations,
including churches and orphanages.
According to the complaint, he promised prospective customers monthly returns of
20% to 40% from forex trading and falsely told some of them that their principal
would be guaranteed.
In addition, he sent account statements from demonstration forex trading
accounts showing high returns from accounts supposedly containing up to $10
million traded by him and the company, without telling the customers that these
accounts were for demonstration and did not represent actual trading.
Ex Con Ran CTA-CPO
In late July the CFTC charged Robert Mihailovich Sr. and Growth Capital
Management LLC of Rockwall, Texas, with fraudulent solicitation in connection
with commodity futures contracts and leveraged foreign currency trading. He is a
felon who was on supervised release while he was soliciting for and operating
Growth Capital is a registered commodity trading adviser and commodity pool
operator under the name of Mr. Mihailovich's son, Robert Mihailovich Jr. The
latter is accused of making false statements in regulatory filings because he
failed to disclose that his father was a controlling principal of the CTA-CPO.
The regulator says that since at least June 2008 Growth Capital and Mihailovich
Sr. fraudulently solicited and accepted more than $30 million from around 93
customers, to invest in futures and forex through discretionary accounts.
Mihailovich Sr. made false representations claiming to be a successful commodity
futures trader with no losing trades.
Moreover, he failed to disclose to customers that he had a federal felony
conviction for mail fraud, had served 27 months in prison and was on a
three-year supervised release.