Commodities / Futures / Options Investment Frauds
What Did You Learn, Class?
One enterprising fellow offered a "Treasury Bond Futures" trading course to the public, promising to teach a trading methodology that would yield high returns over a short period.
He offered a double-your-money-back guarantee if students did not earn at least a certain weekly sum after using the process for a few weeks.
He stated that he was an experienced and successful futures trader whose successes resulted in an opulent lifestyle.
He was, however, neither experienced nor successful as a commodity trader and was, in fact, verging on bankruptcy.
He would show account statements for his own account reflecting phony trading profits to reinforce his assertions that he was a profitable, high-volume trader.
He claimed to have taught students to become successful traders using his trading methods, when in fact he hadn't.
He also never returned any tuition payments.
Micro Profits Macro Losses
Knowing that you need an edge in the highly technical world of futures contracts, you investigate a company you see at a business and franchise exposition which sells a computerized commodity futures trading program called the "Micro-Trading System."
"Financial Business. Average $625 / day before noon from home w/ no employees, no sales, no inventory. YOU CAN TOO. Not MLM or anything you've ever seen. GUARANTEED. $25K req."
"CASH MANAGEMENT SYSTEM - The surest, safest way to getting rich in America is gradually, easily, day by day. If you are open to new ideas. Come watch how I make $500 right before your eyes in 2- 3 hours. Call 305/938-1177."
The Micro-Trading System analyzes historical and real-time market data supplied by a quote service, and then generates various technical indicators which are displayed on twenty split-screen computer windows.
They tell you that the technical indicators will show you the direction of the Swiss Franc futures market, and indicate when and where to enter or exit the market and when to buy or sell Swiss Franc futures contracts.
"On each investment you can earn as much as $1,250 and there are usually an average of two to four such investment opportunities a day before noon.
That's a potential $2,500 a day profit! Plus your own Personal Global Trading Station shows you which opportunities these are —when to buy and when to sell —It's just that easy!
They are so certain you will consistently make profitable trades in the Swiss Franc futures market, by relying on the system, that they guarantee that you will yield an average of $625 in profits before noon each day.
You are encouraged to attend demonstrations at their office suite to learn more about the system.
During these demonstrations you are led to believe that there is little risk of loss as they guarantee that 80% of trades will be profitable and only 20% of trades will result in losses.
They say the vast majority of actual purchasers are using the system successfully and reaping profits; that you will have between eight and fifteen winning trades and between two and four losing trades per week, or that earnings from your winning trades would be three times as large as the losses from your losing trades.
They also say that they have been using the Micro-Trading System to trade successfully for a house account for approximately three years; with $277,000 in profits its best year and approximately $252,000 in profits its worst year; and that you will make a quarter of a million dollars, by trading ten Swiss Franc futures contracts each business day, over the course of a year using their system.
The total cost of the system is $75,000. In return, you are to receive a personal computer containing the Micro-Trading System, a five day training course and ongoing advice.
You are required to pay $15,000 up front plus 10% of your profits each month, or $5,000, whichever is less, until the balance is paid.
Under the terms of a lease agreement, you also agree to pay a monthly fee for the transmission of market price quotes. With such assurances, you sign on the dotted line.
During the training seminar, you are told that although the system is adaptable for trading in other markets, namely Deutsche Mark and S&P futures, it was designed specifically for micro-trading in Swiss Franc futures.
They also provide you with a written training manual and explain how the technical indicators contained on the various charts and graphs will pinpoint the direction the Swiss Franc market is moving, so you know when and how to react.
Their ongoing advice includes daily critiques of your faxed trades, refresher and remedial follow-up courses, and access to daily voice-mail messages recounting the specific Swiss Franc futures trades which you should have made the previous day based on the technical indicators and upcoming economic reports which might have affected the Swiss Franc market.
Based on the $15,000 down-payment cost, they collected at least $2 million from customers before being charged. Of the 123 trading accounts opened by their customers, trading statements reveal that 109 or 89% of the account holders had net trading losses.
They further reveal that these accounts had gross trading losses of approximately $548,992 and gross trading profits of approximately $12,956, resulting in an overall trading loss of approximately $536,035.
You see an ad urging you to call about investments of commodity options because increased demand for heating oil in the winter is likely to push up prices.
Did you know heating oil is an investment traded every day by clever speculators all over the world? Find out how a five thousand dollar investment, could control $168,000 worth of heating oil.
"It won't be long before cold weather is here. Heating oil inventories are down and demand is going up. There are warnings about shortages already. Get the facts on how $5,000 properly positioned can return $20,000 or more with just a ten cent move in heating oil prices. Past performance is not indicative of future results and people can lose money. "
"Low supplies and high demand equals higher prices. Get the strategies now by calling 1-800-HOT-TIPS. $5,000 can return $20,000 or more, but timing and strategy is the key. "
This offer can only be extended to a limited number of people, so be sure to reserve your spot today!
In the spring, such ads may tout commodity options in unleaded gasoline because increased consumption in the summer is likely to boost prices.
Or perhaps they use certain agricultural commodities because El Nino has driven up prices, or a recently-issued government report which has described shortages.
The fact is the market has already factored seasonal demand into the price of futures and options. The same is true of well-known information like El Nino or government reports.
The markets respond immediately, within a few hours, often a few minutes to new information.
In other words, the prices of commodity options and futures contracts already take into account all known or predictable market conditions, such as seasonal changes in demand for a commodity or known shortages of a commodity.
The advent of the summer and winter seasons, or the latest United States Department of Agriculture report on crop size, is not news that is known only to a select few.
A Bumper Crop of Crooks
The most common charges made against brokers who have defrauded people in a commodity pool investment are:
|they misappropriate the funds received from you;|
|they fraudulently guarantee trading profits;|
|they represent that your funds will be used only to trade commodities when they are used for non-authorized expenses of the pools;|
|they fail to disclose the fees and commissions that will be charged;|
|they misrepresent the trading experience and track record of the individual who makes the investment decisions for the pools;|
|they falsely inform you that your funds have been frozen by the IRS, in order to conceal from you that your funds are in fact gone; and|
|they routinely issue altered and false account statements that show that your trades are profitable when they are not, as well as misrepresent the value of pool assets.|
U.S. Commodity Futures Trading Commission, Division of Enforcement, Three Lafayette Centre, 1155 21st Street, N.W., Washington, DC 20581 (202) 418-5320.
Stacking Money More Fun
Edward W. Knipping, 55, whose last job was as a supermarket stockroom clerk collected about $6 million when he lied to 1,200 people in 40 states, Canada and Australia about investments he was supposedly making in the commodities futures market.
Knipping, who pleaded guilty to wire fraud and faces up to 30 years in prison and fines, had no formal education or experience in the financial world but nonetheless founded Time Traders Inc. and Time Traders Investment Group in 1999 and began soliciting investments.
He managed to lose about $1.3 million on the investments, kept about $1 million in Maine bank accounts and paid about $1.3 million. The rest is as yet unaccounted for.
This was the second biggest case of investment fraud in Maine history topped only in 1999 when Catherine Duffy Petit was sentenced to more than 15 years in prison for masterminding an investment scam in which 140 Mainers lost nearly $8 million.
Secured Currency Investments, Inc. ran a $2 million foreign currency trading scam. 04/08/03
The owner of the firm, Eric Weichselbaum, 33 of West Hollywood and Frank Southerland, 63, of Deerfield Beach, Florida were charged in a 29-count indictment for a foreign currency trading scam.
Weichselbaum set up the firm in 1998, he hired some employees, including telemarketers, to use phone and mail contacts to persuade investors living in various states to open trading accounts.
His company advertised itself as a foreign currency options trading house, with affiliates overseas clearing firms in the Bahamas and Switzerland.
The court documents indicated that investors who opened trading accounts with the firm were told that their money would be used for overseas investments in the international foreign currency options market.
Instead, the vast majority of their money was never transmitted overseas or used for the investments claimed, but instead were misappropriated by Weichselbaum and other employees as commissions and other payments.
In his plea agreement, Weichselbaum acknowledges that investors sent at least $2,463,690 in his company, and that in most cases, when they tried to get the money back it was never returned.
Weichselbaum will be sentenced on September 15, 2003. He can receive a sentence of 15 years in prison. Southerland will go to trial on June 3rd.
BE WARNED THE FOREX WEBSITE for Capital Growth Online Ltd. AT www.capitalgrowthonline.net is a con and a solicitation to be defrauded.
The website is run by NATALIA RIGO. She is the mistress of WILLIAM FOGWELL who is in jail in Monaco on fraud charges after he defrauded $70 million from clients of HOBBS MELVILLE.
Do not be taken in by this transparent attempt to steal your money.
Bank transfer details: from website designed by Andrey Zhuk (Web Design Studio - BYStyle Group )
First Union Bank of Delaware
ABA is 026005092
Routing # is 031100869
Account # is 2000010917327
Swift Code is PNBPUS 33
Account name: Riggs&Norman,Inc.
Checks should be made payable to Riggs & Norman, Inc and forwarded to their New York office, 67 Wall Street, Suite 2411, New York, NY 10005-3198.
Above application to be followed by signed Customer Agreement Form to be mailed to Riggs & Norman Inc., New York office, 67 Wall Street, Suite 2411, New York, NY 10005-3198.For info and due diligence on Forex investments see www.moneytec.com