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. and Worldwide Forex Corp.

Luger was arrested in 2001 for his role in the scam, but then prosecutors said he started another operation, called Group 24, while serving house arrest in Boca Raton. The state said an accomplice is currently an international fugitive.

"Those who steal from our senior citizens for their personal gain will be prosecuted to the fullest extent of the law," Crist said. "Floridians can rest assured they will be protected from these unscrupulous characters."

The Boca Raton Police Department and the Broward County Sheriff's Office conducted the investigation.

Luger was convicted in January on counts of racketeering, grand theft, fraudulent transactions and telemarketing fraud. Palm Beach Circuit Judge Krista Marx sentenced Luger yesterday.

South Florida Business Journal
CFTC Charges Two Staten Island Hedge Funds In Foreign Currency Scheme

01/06 - WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) announced today that it filed a federal injunctive action against Alexsander Efrosman, a/k/a Alex Besser, of Staten Island, New York, and two hedge funds under his control, Century Maxim Fund Inc., and AJR Capital Inc., charging them with fraud in the sale of illegal foreign currency (forex) futures contracts.

Specifically, the CFTC alleges that, between April 2004 and June 2005, defendants fraudulently solicited and obtained more than $5 million dollars from as many as 110 customers for the purpose of trading managed accounts in forex futures contracts that were not, as required, traded on a registered entity. The complaint alleges that defendants misappropriated the funds.

Efrosman was previously indicted for mail and wire fraud relating to foreign currency trading in a different scheme, and fled the country. He subsequently was extradited from France to face trial, and in November 2000, pleaded guilty to nineteen counts of mail and wire fraud before the U.S. District Court for the Southern District of New York, and was sentenced to a term of three years of imprisonment.

The CFTC’s complaint alleges that shortly after his release from prison, Efrosman engaged in a new forex scheme through purported hedge funds Century Maxim Fund and AJR Capital. Allegedly, he fraudulently solicited customers to trade forex through Century Maxim Fund, which, Efrosman falsely represented as a hedge fund that had attracted investments from a large number of high net-worth individuals. The complaint also alleges that Efrosman fraudulently solicited customers for forex trading through AJR Capital, which, Efrosman represented to be an opportunity for customers of more modest means to profit from forex trading. According to the complaint, Efrosman misappropriated more than $300,000 from Century Maxim Fund investors and more than $4.9 million from AJR Capital investors.

The complaint also alleges that Efrosman provided his customers with fictitious Century Maxim and AJR Capital account statements reflecting trades that did not actually occur, and profits that did not exist. According to the complaint, the fictitious statements were instrumental in the propagation of the fraud and the solicitation of new customers. Finally, the complaint alleges that all the purported forex trading Efrosman solicited customers to undertake was illegal, as the contracts he solicited were futures contracts that could only be traded on a registered entity.

The CFTC filed its complaint on September 30, 2005. On that same day, court orders were entered which, among other things, froze defendants’ assets and sealed the complaint. The court’s seal was lifted on January 24, 2006. In its complaint, the CFTC is seeking preliminary and permanent injunctive relief, a freeze of defendants’ funds, restitution for defrauded customers, civil monetary penalties, and disgorgement of ill-gotten gains.
Richmond man faces up to 120 years for foreign currency school fraud scheme

12/06 - (AP) RICHMOND, Va. -- A 22-year-old Richmond man accused of cheating more than 350 investors out of about $8.3 million pleaded guilty Wednesday to mail fraud and money laundering.

James E. Brown Jr. faces a maximum of 120 years in prison and fines of up to $16 million on each count when he is sentenced March 14 by U.S. District Judge Richard Williams, according to federal prosecutors.

Brown was arrested in September after an investigation by the FBI, the U.S. Postal Inspection Service and the Internal Revenue Service. Authorities charged that Brown, owner and president of Brown Investment Services, promised investors he could double their money every 30 business days through trading on the Foreign Currency Exchange Market.

The investment program, which Brown promoted at classes and seminars, was bogus. Little of the money was invested, and Brown paid early investors with cash coming in from subsequent investors to lull them into believing the investments were paying off as promised.

Brown used the money to finance a lavish lifestyle, including a $2.9 million fleet of luxury automobiles for himself and his employees.

According to prosecutors, of the $8.3 million Brown obtained from investors, he only invested $484,000 in the foreign currency market, losing about $61,000. Only about $700,000 remained in the company's bank account when Brown was arrested.
Forex trading educational center taught victims how to lose money

08/07 - California - Joel Nathan Ward, 48, of Turlock, has pleaded guilty to charges related to swindling millions of dollars out of trusting investors.

Mr. Ward, a frequent commentator and seminar speaker on foreign currency exchange (“forex”) trading, ran an elaborate scam through two of his companies, the Joel Nathan Forex Investment Group of Turlock and Learn: Forex Inc., a forex trading educational center based in Sacramento, federal prosecutors say.

A federal grand jury indictment alleged that as part of the scheme, Mr. Ward offered investors the opportunity to invest in the foreign exchange interbank “spot” market through his fund, the Joel Nathan ForexFund. Many of the victims were family members, close friends, and individuals who had been enrolled in the Learn: Forex program, either in Sacramento or through online classes.

Mr. Ward required a minimum $50,000 investment, and told investors they could anticipate significant returns.

The indictment also charged Mr. Ward with defrauding investors in a second scheme relating to a purported real estate investment project in Mississippi. He was alleged to have simply diverted investors' funds to his own use.

In pleading guilty Friday, Mr. Ward admitted that he stole the investors’ funds, using the money for his own compensation and expenses, and to purchase the Learn: Forex School in Sacramento. He also admitted that in order to conceal the theft, he made “Ponzi” payments using other investors’ funds and provided his investors with altered account statements.

The scheme collapsed in November 2006. The investor victims lost over $7 million.

"Ward used his self-proclaimed expertise in foreign currency trading to steal millions of dollars from family, friends, employees, and other investors. While he claimed to be a highly successful trader, in fact he was merely a thief,” says U.S. Attorney McGregor Scott.

The guilty pleas were entered to five counts of wire fraud, two counts of mail fraud, and two counts of engaging in monetary transactions in property derived from specified unlawful activity, a form of money laundering, according to Assistant U.S. Attorneys Benjamin Wagner and Ellen Endrizzi, who are prosecuting the case.

There was no plea agreement in the case, and Mr. Ward is to be sentenced Nov. 2.

The maximum penalty under federal law for each offense of wire fraud and mail fraud is 20 years’ imprisonment, a three-year term of supervised release, and a $250,000 fine. The maximum penalty for each offense of money laundering is ten years’ imprisonment, a three-year term of supervised release, and a $250,000 fine. However, the actual sentence will be determined at the discretion of the court after consideration of the advisory Federal Sentencing Guidelines, which take into account a number of variables, and any applicable statutory sentencing factors.

Central Valley Business Times
Commodity Futures Trading Commission warns of a rise in foreign-currency trading scams.

03/06 - They reach people, often retirees, through cold calls and television commercials. And they likely made off with $1 billion of stolen money in the last five years.

Foreign-currency trading scam artists, thanks to their growing numbers, are the target of increased enforcement and education efforts by federal regulators. And a disproportionate number of them seem to have set up camp in South Florida, said Reuben Jeffery, chair of the U.S. Commodity Futures Trading Commission, at the Boca Raton Resort & Club.

Jeffery and other CFTC regulators said the Futures Industry Association has created a task force to attack the fraud problem that plagues the foreign-currency markets, which trade an average of $1 trillion a day.

"Most forex dealers are legitimate. But there are a growing number of scam artists," CFTC Commissioner Michae Dunn said. "It's a black mark on the entire industry."

He said scam artists have ripped off tens of thousands of Americans of all ages, though they primarily target retirees. In the 87 cases the CFTC has filed in federal court in the last five years alleging foreign-currency fraud, investors have lost a total of $380 million. Dunn estimates that investors lost $1 billion in that time to foreign-currency fraud.

"We've got stories of people suffering from dementia and get these cold calls," said Dunn said. "There are also some very, very bright people [who get scammed]."

With foreign-currency trading, investors buy currencies on the open market. They hope the currency they're buying will rise in value more than the currency they're using to buy it.

The CFTC is working with state and local authorities to step up investigations and prosecutions in fraud cases. It is also trying to educate the public through an informational brochure, partnerships with consumer groups and town hall-style meetings hosted with the National Futures Association.

The message, in large part, is that investors should be wary of unlicensed brokers offering deals that sound too good to be true. Investors should avoid high-pressure sales, confusing investments and brokers who encourage them to mortgage their home or cash out their retirement savings.

Dunn also encouraged people who've been cheated to spread the word about fraud among their friends and neighbors.

"I'm always amazed people are being defrauded and they don't tell anybody about it," he said. "We had a whole community ripped off that way."

Investors who suspect fraud or want more information can visit www.cftc.gov. The National Futures Association's website, www.nfa.futures.org, also allows people to run background checks on brokers.

Palm Beach Post
Man given prison time in currency fund scam

01/06 - California - A San Diego man was sentenced yesterday to five months in prison and five months' house arrest for his part in a multimillion-dollar scam centered on a bogus foreign currency fund.

Stephen Baere, who worked for Richard Robert Matthews at the La Jolla-based White Pine Trust Corp., was sentenced by San Diego federal Judge Jeffrey Miller. Baere is to surrender to federal authorities March 27.

Matthews admitted last April to soliciting $22 million from 247 investors between 2000 and 2004 and then absconding with much of the money, according to court filings.

He pleaded guilty to one count of mail fraud and was sentenced in December to more than five years in prison. He also was ordered to pay back more than $14.7 million to investors in the United States and abroad.

Baere admitted to prosecutors in June that he misled hundreds of investors, but he said yesterday through his lawyer that he was unaware that the fund was bogus and that Matthews was making off with clients' money.

“He had no idea what Matthews was doing, and he was crushed when he found out,” said Colin Murray, Baere's attorney.

Baere, who pleaded guilty to one count of conspiracy to commit mail fraud, told prosecutors that he worked for Matthews between January 2002 and December 2003. During that time, Baere told prosecutors that he gained between $400,000 and $1 million.

In addition to the prison time, Miller yesterday ordered Baere to pay $600,000 in restitution.

Tyler Zollinger, also associated with White Pine, is scheduled to be sentenced in February.