CFTC charges James Ossie and CRE Capital over USD25m currency Ponzi Scheme

CFTC charges James Ossie and CRE Capital over USD25m currency Ponzi Scheme

The US Commodity Futures Trading Commission has charged James Ossie and his company CRE Capital Corporation with operating a Ponzi scheme involving more than 100 people and approximately USD25m in connection with foreign currency transactions.

Ossie resides in Dawsonville, Georgia and is president and sole owner of CRE; neither has ever been registered with the CFTC.

According to the CFTC's complaint, Ossie and CRE promised pool participants that they would earn a ten per cent return on their money within 30 days by trading US and Japanese currency pairs.

The complaint further alleges that since 18 June 2008, rather than making money for pool participants, Ossie and CRE lost approximately USD4.4m trading forex.

Finally, the complaint alleges that Ossie and CRE operated a Ponzi scheme, in which forex trading 'profits' were actually paid from the principal of subsequent pool participants.

'Investors must run the other way when approached by anyone claiming to guarantee exorbitant monthly returns, like those promised by CRE and Ossie. Such representations should raise an immediate red flag that such investment is too good to be true,' says CFTC acting director of enforcement Stephen J Obie. 'We are seeing an uptick in Ponzi scheme cases because, in this economic climate, new investors cannot be found to perpetuate the scheme. As these schemes collapse, the CFTC will move swiftly to prosecute those who harm innocent investors.'

This is the first case brought by the CFTC's Forex Enforcement Task Force under the new powers granted to the commission under the Food, Conservation, and Energy Act of 2008.

In the continuing litigation, the CFTC seeks restitution, disgorgement, civil monetary penalties, and permanent injunctions against further violations of the federal commodities laws and against further trading. The SEC filed a related action against Ossie and CRE.

The CFTC has also obtained a USD240,000 civil monetary penalty judgment and trading and registration bans against Boris Shuster of Fort Dix, New Jersey for operating an illegal foreign currency boiler room operation and violating the anti-fraud provisions of the Commodity Exchange Act.

The order, entered by US District Court Judge Leo I Glasser in the Eastern District of New York, grants the CFTC's motion for summary judgment against Shuster. The order also notes that although Shuster's violations merit the award of significant restitution, the court is not ordering additional restitution because Shuster is subject to a USD310,000 criminal judgment restitution obligation entered in a parallel criminal proceeding, US v. Shuster, E.D.N.Y. Docket No. 04 Cr. 628.

The court's order stems from a CFTC complaint filed in October 2003, alleging that Shuster and others fraudulently solicited more than 300 customers to trade illegal off-exchange forex contracts. The court's order specifically finds that, from at least December 2000 to at least July 2001, Shuster used a sales force to make fraudulent and misleading representations regarding the profitability and safety of trading forex contracts and the actual trading of customer funds. The order also finds that Shuster issued false account statements to customers, and then told customers that catastrophic trading losses had wiped out their funds.

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