beware of foreign currency trading fraud

Beware of Foreign Currency Trading Fraud

Aug 31, 2020

Last week, the Commodity Futures Trading Commission (“CFTC”) announced charges against individuals in a  foreign currency Ponzi scheme targeting African immigrants. The alleged perpetrators Dennis Jali, Arley Ray Johnson, and John Frimpong were charged with participating in a 28 million Ponzi scheme by fraudulently soliciting funds from investors for the “1st Million Pool” through and on behalf of 1st Million LLC, Smart Partners LLC, and Access to Assets LLC. The CFTC complaint alleges that the defendants fraudulently solicited participants to trade in foreign currency (Forex) and digital assets such as bitcoin through pooled trading accounts controlled by Jali.   According to the CFTC, the defendants allegedly targeted members of church communities by portraying the 1st Million Pool as a means to obtain financial freedom and support charitable religious causes. As alleged, from 2017 to 2020, over 1000 participants contributed at least $28 million to the 1st Million Pool, often through entering “secure contracts” that falsely promised investors’ funds would be held in trust or escrow, used to trade Forex and bitcoin, and then returned in their entirety at the end of the pool participation term. The complaint alleges that the defendants misappropriated at least $7 million of 1st Million Pool funds and used it to pay for expensive cars, personal travel, and living and business expenses. The SEC also brought charges against Jali, Frimpong, and Johnson, who both directly and through their companies 1st Million LLC and The Smart Partners LLC, are alleged to have falsely told investors that their funds would be used by a team of skilled and licensed traders for Forex and cryptocurrency trading, promising risk-free returns of between 6% and 42%. The SEC’s complaint alleges that the defendants often targeted vulnerable African immigrants and exploited their common ancestry and religious affiliations. The SEC charges that Jali used investor funds to pay for, among other things, two luxury cars, private jet charters, airfare and hotels, extravagant retail purchases (including purchases at Gucci, Tory Burch, and Burberry), and a down payment for a house in Atlanta. Jali’s personal expenses were totally unrelated to cryptocurrency and Forex trading, and were contrary to the explicit statements to investors. Beware of Foreign Currency Trading Frauds Foreign currency trading fraud or Forex related scams are not new. In fact, the CFTC warns investors to be cautious when it comes to forex trading  as follows: The advertisements seem too good to pass up. They tout high returns coupled with low risks from investments in foreign currency (forex) contracts. Sometimes they even offer lucrative employment opportunities in forex trading. Do these deals sound too good to be true? Unfortunately, they are, and investors need to be on guard against these scams. They may look like a new sophisticated form of investment opportunity, but in reality, they are the same old trap—financial fraud in fancy garb. Forex trading can be legitimate for governments and large institutional investors concerned about fluctuations in international exchange rates, and it can even be appropriate for some individual investors. But the average investor should be wary when it comes to forex offers. The CFTC and the North American Securities Administrators Association […]

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borker fraud

Fraud in the Time of COVID-19: Red Flags of Investment Fraud

Apr 6, 2020

Whenever there is a stock market crash, such as in the COVID-19 stock market crash, fraud that has been hidden for years can come to the surface. This is particularly true for investment scams. This happened with Bernie Madoff. The stock market crashed, and people wanted access to their money. That was when they learned from the first time that the money they thought that they had safeguarded with Madoff was, in fact, just an illusion. It turned out that Madoff was running a plain old Ponzi scheme. When no new money was coming in to pay off old investors, Madoff’s multi-year Ponzi scheme finally came to light. The Coronavirus market crash will bring to light many investment wrongs and fraudulent or negligent conduct which has gone undetected during the great bull market. As long as investments were going up, many investors were not fully aware of unsuitable investments, improper margin risk, or fraudulent conduct. Scams Can, and Do, Happen Sadly, there are always going to be people who try to take advantage, who try to take shortcuts, who try to make an easy dollar, who try to cash in even if it means taking advantage of others. It does not matter whether you are a novice with finances or a very sophisticated investor. There are unscrupulous people out there, and when it comes to money, people often make the wrong, even criminal, choice. Of course, that is the reason why we have laws, and why there are regulatory bodies like the Securities and Exchange Commission (“SEC”) or FINRA to try to protect investors from the unscrupulous practices of some investment brokers.   That said, it is infinitely better to “nip something in the bud” before it becomes a problem that requires using FINRA, filing a lawsuit, or calling the authorities. The way to avoid investment scams, then, is to keep a sharp eye out for those “red flags” that tell you that there is something fishy going on. Below, we will discuss the 5 red flags of investment fraud that should help you separate those above-board investment brokers with those who might be trying to take advantage of your trust.     If, after reading this blog, you have additional questions on broker negligence or broker fraud, we invite you to contact broker fraud attorney Melanie Cherdack. Ms. Cherdack is a broker fraud attorney who understands the plight of those who were victims of investment fraud. As a former Wall Street attorney, she has “seen it all” when it comes to the schemes that investment brokers use to defraud their clients. We invite you to contact us today on our online contact form, or by calling 888-768-2499. 1. Promises of Unrealistic, Guaranteed or Excessive Returns. This first red flag is an important one to keep in mind. It is just human nature to want to believe something when it comes to growing your finances, even if it sounds too good to be true. Even the most stable investments will fluctuate when the market is volatile or is in “bear market” territory as the market is in now.   So, when your investment advisor […]

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