CFTC Stops Another Forex Ponzi Scheme
CFTC Charges VA Resident Ronald W. Smith, Jr. with Fraudulent Solicitation and Misappropriation of $800,000+ in Customer Funds
Overview
CFTC charges Smith with providing false account statements to his customers and using at least $800,000 of his customers’ investment money to pay for personal expenses. CFTC claims that Smith traded hardly any of the funds in his customers’ accounts. Additionally, Smith is charged with luring customers in to his trading scam by promising too-good-to-be-true returns on investments, as well as using online media websites like YouTube.com to promote his corrupt trading program. The Court ordered a freeze of assets held or controlled by Smith and relief defendants Angela A. Duty Smith and Tigre Systems, Inc.
Major Takeaways
- Hallmarks of a forex scam are ridiculous returns and blatantly false information about trading
- Prominence given to internet activity including YouTube videos (for more information, see NFA’s new social media policies)
- Ultimately, the big count was under 4b(a)(2)(A)-(C) of the Commodity Exchange Act for fraudulent solicitation, misappropriation, and false statements
To view the Order, click here.
To view the Complaint, click here.
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CFTC Charges Virginia Resident Ronald W. Smith, Jr., Doing Business as Safeguard 3030 Investment Club, in Forex Fraud Scheme
Smith allegedly misappropriated approximately $800,000; court orders defendants’ assets frozen.
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today charged Ronald W. Smith, Jr., of Vansant, Va., doing business as Safeguard 3030 Investment Club, with operating a Ponzi scheme involving the fraudulent solicitation of at least $800,000 from at least 34 customers in connection with off-exchange foreign currency (forex) trading. The CFTC complaint also charges the defendant with misappropriating approximately $800,000 of customer funds for personal use and to pay out purported profits and with issuing false customer statements to conceal the fraudulent misuse of funds.
Two relief defendants, including Smith’s wife, named in the federal lawsuit
The Honorable James P. Jones of the U.S. District Court for the Western District of Virginia, on February 23, 2010, the same day the complaint was filed, entered an order freezing assets held or controlled by Smith and relief defendants Angela A. Duty Smith andTigre Systems, Inc. (Tigre) and prohibiting document destruction. The order also requires Smith and the relief defendants to account for assets. The CFTC complaint names Angela Smith and Tigre as relief defendants because they allegedly received customer funds to which they had no entitlement. Relief defendant Duty Smith, the treasurer of Tigre, is defendant Smith’s wife.
Defendant Smith allegedly used a video posting on www.youtube.com to lure and solicit customers
Specifically, the CFTC complaint charges that, since at least January, 2009, defendant Smith fraudulently operated a forex trading scam, luring customers to trade managed forex accounts or pooled forex investments by claiming forex trading success and offering promises of quick and large returns, such as 30 percent in 30 days. Smith allegedly claimed that 95 percent of his trades are winning trades. Smith also used a website and a video posting on www.youtube.com to solicit customers, according to the complaint.
In reality, however, Smith used little, if any, of the funds to trade forex. Instead, he used customer funds for personal expenses, such as for pool services, carpeting and furniture, according to the complaint. Customer funds also were allegedly used for purported profit payouts and for business expenses.
Relief defendants Tigre and Duty Smith opened and maintained the bank account into which defendant Smith directed customers to deposit their funds. As further alleged, no funds from this bank account appeared to be directed to any trading; instead the account was used as a personal checking account of the Smiths.
Judge schedules preliminary injunction hearing on March 5
Judge Jones ordered defendant Smith to appear in court on March 5, 2010, at 10:00 a.m. for a preliminary injunction hearing. The CFTC, in its continuing litigation, seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties and a permanent injunction against further violations of the federal commodities laws.
The following CFTC Division of Enforcement staff are responsible of this case: August A. Imholtz III, James A. Garcia, Kassra Goudarzi, Michelle Bougas, Kara Mucha, Michael Solinsky, Gretchen L. Lowe and Phyllis J. Cela.
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Other forex law blog articles include:
- Capital FX LLC Violates NFA Compliance Rules, Permanently Banned from NFA Membership
- Forex Fraudster Jailed For Violating Court Orders in CFTC Anti-Fraud Action
- Forex Hedge Fund Fraudsters Fined by CFTC
- Foreign Exchange Currency Fraud - CFTC Alert on Forex Fraud
Comments
4 Responses to “CFTC Stops Another Forex Ponzi Scheme”
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It is companies like this that give Forex Trading such a bad name. It is really a shame, that the market is suffering because of a few rotten apples.
So when you consider trading Forex with a particular broker, my advice would be to do some research on the broker. See what certifactions it has, how long does the company exist, what is there capital.
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