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Virginia resident charged with operating forex fraud scheme

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The US Commodity Futures Trading Commission has charged Ronald W. Smith, Jr. of Vansant, Virginia, doing business as Safeguard 3030 Investment Club, with operating a Ponzi scheme involving the fraudulent solicitation of at least USD800,000 from at least 34 customers in connection with off-exchange foreign currency trading.

The CFTC complaint also charges the defendant with misappropriating approximately USD800,000 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.

The Honourable James P. Jones of the US District Court for the Western District of Virginia has entered an order freezing assets held or controlled by Smith and relief defendants Angela A. Duty Smith and Tigre Systems 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.

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 per cent in 30 days. Smith allegedly claimed that 95 per cent of his trades are winning trades. Smith also used a website and a video posting on 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 a 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 Jones ordered defendant Smith to appear in court on 5 March 2010 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.

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