The US Commodity Futures Trading Commission has charged Robert D. Watson, an executive professor at Texas A&M University, Daniel J.
The US Commodity Futures Trading Commission has charged Robert D. Watson, an executive professor at Texas A&M University, Daniel J. Petroski, a Texas lawyer and accountant, PrivateFX Global One, allegedly a Panamanian corporation, and 36 Holdings, allegedly of the UK and/or Switzerland, with orchestrating a multi-million dollar fraudulent off-exchange foreign currency scheme.
The CFTC alleges that to entice investors to purchase shares in Global One, the defendants touted their supposedly extremely successful historical performance of forex trading. The defendants claimed forex trading returns that ranged from approximately six per cent to ten per cent quarterly from 1 January 2000 through 30 June 2006, without ever having a losing quarter.
The CFTC’s complaint further alleges that since beginning operations in 2006, approximately 60 investors purchased approximately USD19.5m of shares in Global One. The defendants have reported returns, purportedly generated almost exclusively through forex trading, to Global One investors of approximately 1.5 per cent to three per cent each month and claimed never to have had a losing month trading forex.
The defendants claimed in monthly individual investor reports, Global One’s financial statements, and on Global One’s website, among other places that almost all of their individual forex trades since 1 January 2008, resulted in a profit. According to the complaint, the defendants’ representations to Global One investors regarding Global One’s extraordinary forex trading profits and the concomitant returns these investors supposedly enjoyed are false.
The complaint further alleges that to conceal their fraud from the CFTC, the defendants provided the CFTC with falsified account statements showing supposed profitable forex trades at an international brokerage house from 1 January 2009 to 30 April 2009. These statements purport to detail more than 100 separate forex transactions that resulted in forex trading profits of USD7,465,629 in the 36 Holdings trading account from 1 January 2009 to 30 April 2009, of which USD2,096,377 was allocated as profits for Global One. The complaint alleges that these account statements are fictitious.
Further, the complaint alleges that the defendants produced to the CFTC false Swiss bank statements for 36 Holdings in an attempt to conceal their fraud and discourage further investigation by the CFTC.
Steve Obie, CFTC acting director of enforcement, says: ‘This CFTC litigation shows that even those with seemingly upstanding reputations and trustworthy positions are potential fraudsters. I continue to caution investors to vigorously and continuously question anyone to whom they entrust their hard-earned cash, even those who seem above and beyond reproach.’
At the request of the CFTC, on the same day the complaint was filed, US District Court Judge Sim Lake froze the defendants’ assets and permitted the CFTC to seize all relevant records in their possession.
