Numerous Charges Against Forex Firms
In past few weeks the Commodity Futures Trading Commission took action against a
significant number of operators in the foreign currency market. This is a
continuing trend. In recent years the regulator investigated and often brought
charges against forex businesses and repeatedly warned that there has been a
sharp rise in scams in this area.
The 2010 Dodd-Frank Act gave the CFTC additional powers to regulate foreign
exchange dealers. On the basis of new rules that require forex dealers to
protect investors, in late January the agency started 13 lawsuits against 14
entities, accusing them of operating without being registered with the CFTC and
illegally soliciting money from the public for forex investments.
In separate actions, the regulator got court orders freezing the assets and
records of several forex managers, brought new fraud charges and obtained a
restitution order in an ongoing case.
Some of the accusations are about relatively small sums of money. Thus two
residents of North Carolina and their company, PMC Strategy LLC, were charged
with fraudulently soliciting $669,000 for foreign exchange trading accounts.
They allegedly lost about $300,000, concealed the losses, used $151,000 to pay
customers phantom returns and took some $129,000 for their personal use.
But other forex cases involve many millions of dollars.
Sky Diving and Divine Stewardship
A group of people from Ohio and North Carolina are accused of a $35 million
Ponzi scheme. Among the charges are the misuse of customer funds to start side
businesses and finance maid services, cars, real estate and lavish trips such as
a sky diving holiday.
The CFTC says the defendants solicited money from at least 240 individuals to
invest in off-exchange forex through the Black Diamond trading platform, which,
however, did not exist. They issued monthly statements showing large but
fictitious profits and used some of the funds to pay the supposed profits to
A court froze the assets of this group- Keith Simmons, Deanna Salazar, Bryan
Coats, Jonathan Davey and various companies they controlled, including Black
Diamond Capital Solutions LLC, Safe Harbor Ventures Inc., Safe Harbor Wealth
Investments Inc., and Divine Stewardship LLC.
The US. Attorney's Office for the Western District of North Carolina has brought
criminal charges against some of the individuals. Mr. Simmons was convicted of
securities fraud, wire fraud and money laundering and Ms. Salazar pleaded guilty
to fraud conspiracy and tax evasion.
In another case 70-year-old Larry Benny Groover of Texas was charged with
fraudulently raising $1.4 million to trade forex. He was never registered with
the CFTC and had served time in prison after being convicted of securities fraud
The complaint says he traded with a portion of the capital, lost most of this
and issued false account statements to at least one customer, showing profits
though he had lost nearly all of that customer's money. In addition, he
allegedly misappropriated more than $750,000 from at least 22 customers.
The misappropriated money was spent on personal expenses such as medical care,
groceries, dining, cable television, auto repairs, gasoline and insurance, as
well as to purchase software and trade publications and make payments to Mr.
Groover and his wife.
Separately, Anthony Eugene Linton of Arizona faces charges of fraud and
misappropriation of customer money in a Ponzi scheme involving off-exchange
forex trading. He allegedly raised at least $650,000, telling people that they
would make 100% a year on their investments and there were no risks in trading
foreign currency through his Private Trading Pool.
Also, in January a federal judge ordered the defendants to pay more than $4
million in restitution and penalties in a case the CFTC filed more than a year
ago against Beau Diamond and Diamond Ventures LLC of Florida for operating a
forex scam. This scheme took in $37 million from 200 customers.