02/07 - (Gulf News) Dubai: The Dubai Financial Services Authority (DFSA) said on Thursday it has broken a global currency trading scam.
The scam invited investors in Australia and Singapore to put their money in fictitious entities which claimed to be based in the Dubai International Financial Centre (DIFC).
One alleged operative, who liaised with potential investors using a UAE phone number, has been arrested in Dubai. At least six fraud victims contacted the DIFC regulator, leading to a four-week investigation.
"At this stage we cannot be certain about the size of the scam or investor losses, but we know that approximately $600,000 has passed through a bank account set up by these fraudsters in Malaysia," DFSA chief executive David Knott said.
The probe was conducted by DFSA and with the Emirates Securities and Commodities Authority and involved market regulators from Malaysia, Britain, the US and Singapore.
The racket operated three fictitious entities called the Dubai Options Exchange, the UAE Commodities Futures Board and Cambridge Capital Trading. All claimed to offer services within the DIFC.
The fraudsters used a US-based internet service provider. Australian and Singaporean investors were cold called by representatives of Cambridge Capital Trading to take options on currency movements.
The investors were then directed to the false websites and told to transfer funds into the bank account in Malaysia.
Florida is fertile for foreign currency fraud
02/06 - When investigators from the Commodities Futures Trading Commission looked into Lazaro Jose Rodriguez's bank accounts, they said they found that in a single month he had withdrawn customer trading funds to spend $173,251 on two Chevrolet Corvettes.
In a separate case, the CFTC in December sued a Coral Springs man and the companies he ran, alleging they had fraudulently taken $14 million from at least 140 people by falsely claiming they made large profits trading foreign currency futures.
Commodities fraud, a growing problem in South Florida and across the nation, will be a topic of debate when industry leaders meet at the Futures Industry Association's annual conference next month in Boca Raton.
Though there are no reliable statistics on commodities fraud by geographic region, and many cases include suspects from different areas, the industry consensus is that South Florida outpaces the rest of the nation.
"The combination of numerous palm trees, roguish telemarketers, phone banks, rich retirees, telemarketing defense lawyers, and [South Florida's] close proximity to foreign jurisdictions makes it a magnet for those that want to earn their living with their tongue and a telephone," said Gregory Mocek, enforcement director for the CFTC, which polices the sale of commodity futures and options. "Pour a little Panama Jack suntan oil on the situation and you have a perfect environment where investors get burned."
In a suit filed earlier this month, the CFTC alleged that Miami-based Rodriguez had burned about 400 investors for a total of $1.5 million after promising them 300 percent trading profits. Rodriguez could not be reached for comment.
Among the trends the CFTC is finding in South Florida: Trading operations are overcharging customers by requiring them to pay both a commission and a so-called spread, essentially another commission. Some boiler rooms have started to seek investors for gold, which is attractive because it has risen 26 percent in the past year.
With the growth of the Internet, regulators also are seeing more online trading operations offering illegal foreign exchange contracts and then misusing the investments they receive, Mocek said.
Some industry experts say South Florida's history as a hotbed for telemarketing boiler rooms makes it easy for fraudsters to move quickly into commodities such as currencies when the market gets hot.
"South Florida was the commodities options fraud capital of the world in the early to mid-1980s," said Robert Wayne Pearce, a Boca Raton lawyer specializing in commodities and stock law. In the 1990s, federal and state officials cracked down on boiler rooms, and the commodities markets quieted as investors shifted money into the stock market.
But with the prices of commodities such as gold, oil, copper and platinum rising sharply in the past year, investors have become more interested in the esoteric world of futures and options trading. "That gives opportunities to the hucksters out there," Pearce said.
One good indicator, though unscientific, is that advertisements for training in commodities trading are starting to appear more frequently in newspapers and other media outlets, he said.
Commodities are physical goods, such as metals, foods, grains and currencies. An investor usually buys them through a futures contract, an agreement to buy or sell a set amount of a commodity at a predetermined time.
A futures contract is an obligation to the buyer and seller. An options contract is different in that it is an obligation only to the seller.
Nationwide, the CFTC has gathered about $300 million in restitution and penalties in 85 cases in the past five years, Mocek said. About 24,000 people were victims in those cases.
But John Damgard, president of the Futures Industry Association, thinks the penalties -- typically suspensions, fines or banishment from the industry -- aren't harsh enough.
The biggest problem is not the firms that trade on exchanges, but criminals running "storefronts" that pretend to be legitimate, Damgard said. In South Florida, the CFTC needs to work more closely with law enforcement officials and the state attorney's office to ensure that offenders go to jail, he said. The CFTC doesn't have that authority.
"It's a cruel hoax to make the CFTC the lead agency in putting these guys in the slammer," Damgard said. He would like to see a state prosecutor in Florida "make an example" of fraudsters the way New York Attorney General Eliot Spitzer challenged Wall Street firms in court.
Mocek said the CFTC opened an Office of Cooperative Enforcement more than three years ago and has been collaborating with the FBI, state attorney general offices and local prosecutors.
But Mocek knows that as long as the weather is agreeable, commodities fraudsters will make South Florida home.
"There are a number of people," he said, "who would rather do it from a warm spot rather than sit on an icecap."
Sun-Sentinel
Conmen plead guilty in forex-based pyramid schemes
01/06 - Two players in lucrative Boca Raton-based pyramid schemes pleaded guilty Friday to a host of counts, with one doing so only after a previously negotiated prison sentence and the other hoping for a judge's mercy.
David Luger, 46, was a key player in foreign currency exchange schemes that did business as Worldwide Forex and USFX and bilked investors out of at least $3.5 million, according to Assistant Statewide Prosecutor Margery Lexa.
At his March 9 sentencing, Circuit Judge Krista Marx has the discretion to send Luger away for 12 to 410 years for his crimes, which include 48 counts of telemarketing fraud by an unlicensed salesperson as well other counts of racketeering, conspiracy, grand theft, organized scheme to defraud and money laundering. He is on house arrest pending sentencing.
Richard Maseri, 48, of Boca Raton, engaged in a separate pyramid scheme with Luger and others while Luger was on house arrest, Lexa said. Acting as his own attorney, Maseri negotiated a five-year prison term, as long as he shows up for formal sentencing on March 6 with a check for $87,800 that will be split among three victims. He pleaded guilty to organized scheme to defraud and fraudulent transactions.
Several other co-defendants previously have pleaded guilty in connection with the schemes. One of the men, Sean Burns, who was the alleged leader, fled to Great Britain. He operated the Ponzi schemes in a "cocaine- and alcohol-induced haze," according to the prosecutor.
Luger, of Boca Raton, ran the operation following Burns' departure.
The defendants, whom Lexa characterized as running a "very sophisticated, very sexy operation," snookered investors from all walks of life and various states.
The recruitment tactics included buying infomercial time on the local AM radio show of Joyce Kaufman, during which Burns touted his market expertise. Another tactic: using a shill to convince people they could make big bucks by investing. The scheme fell apart when too many of the investors wanted out and demanded their money.
Sun-Sentinel
Restitution ordered in foreign currency investment fraud case
03/06 - Florida - Seventy victims in an investment scam may get a chance to recoup their losses.
Attorney General Charlie Crist, Friday, said David Alan Luger, of Boca Raton, has been ordered to pay $2.2 million in restitution to victims of what the state called a multimillion-dollar investment fraud.
Luger was also ordered to serve 13 years in prison. He was convicted in a case prosecuted by Crist's Office of Statewide Prosecution.
Luger, who was prosecuted for management roles in what the state called several boiler room operations, ran what prosecutors called an investment fraud ring that victimized elderly Floridians, promising high returns in the foreign currency market.

Instead of investing the funds, prosecutors argued Luger and an accomplice kept the money for their personal use. The state said many of Luger's victims lost their retirement savings to the scam.

The boiler rooms operated from 1999 to 2003 under the business names USFX Corp.