Archive for August, 2008

SEC Halts Foreign Currency Futures Scam

Sunday, August 31st, 2008

The SEC has charged Patrick H. Haxton of Carrollton, Texas, and his company Royal Forex Management, LLC with securities fraud.  Specifically, the Commission claims that Haxton solicited investments by telling people that he had generated historical returns on foreign currency trading of 400% to 500% per year.  The fund actually lost money, and Haxton misappropriated what was left to his personal use.  The Commission alleges that some of the investments were never used to trade currency but instead went right into Haxton’s pocket.  (more…)

The Family Reunion

Thursday, August 28th, 2008

At your family reunion, if there is one person who lost money in a Ponzi scheme, there is almost certainly another.  While Ponzi schemes are as different from one another as snowflakes, many cut a swath not just through a household, but through an entire extended family. (more…)

Don’t Trust the ‘Test Drive’

Wednesday, August 27th, 2008

We’re looking at facts that are common to Ponzi schemes. No two are alike, but many share common characteristics.  (more…)

Please, Please Help the Regulators and the Prosecutors

Tuesday, August 26th, 2008

In my time at the SEC and private practice, I have seen scores of Ponzi schemes.  Through Investors Watchdog I help people avoid those scams every day.  Setting aside the devastation that those scams bring to baby boomers and senior citizens who have lost the nest eggs it took them decades to accumulate, the scams are interesting to follow.  The specifics of the scam are limited only by the imagination of the scam artist.  But there are a few things that pop up in every case. (more…)

Look in the Driveway

Monday, August 25th, 2008

Through nearly twenty years investigating Ponzi schemes I’ve noticed that, like fingerprints, no two are alike.  Financial criminals are novelists, not biographers.  They are not bound by objective fact.  The stories they tell on their way to stealing what it took you decades of hard work to accumulate are limited only by their imaginations.  That flexibility makes them hard to spot.  If you know what to look for, though, you can sometimes recognize them.   (more…)

‘Recovery Firms’ Targeting British Investors

Friday, August 22nd, 2008

When a company goes into bankruptcy, shareholders lose everything.  Imagine their joyful surprise, therefore, when they get a call from a company offering to buy their worthless shares for an attractive price.  All the investor has to do is send in an administrative fee to “cover the transfer of ownership.”  As soon as the investor sends in the fee, the buyer disappears never to be heard from again.  (more…)

Desperate to Believe, Victims Angry with Regulators for Shutting Down Alleged Ponzi

Thursday, August 21st, 2008

It happens in every Ponzi case.  Investors who have been receiving “distributions” from an investment program, or believe that a distribution is just around the corner, become angry when securities regulators shut the investment down and freeze its assets.  The investment promoters put out press releases blaming the regulators for interfering in an investment they “just don’t understand,” and promise that everything will be sorted out shortly.  (more…)

International Pump and Dump

Wednesday, August 20th, 2008

The SEC has charged GHL Technologies, Inc. of Bremerton, Washington, and its CEO, Gene Hew-Len with issuing false press releases designed to raise the price of GHL stock.  The Commission has also charged Francisco Abellan (known as “Frank Abel”) of Barcelona, Spain with coordinating the scheme.  The SEC claims that Abel sent glossy promotional mailers to more than 2 million Americans and sold more than $13 million in GHL stock to unsuspecting investors who bought GHL on the strength of the false press releases and the glossy brochures.  The SEC release states: (more…)

Another Day, Another Affinity Fraud

Monday, August 18th, 2008

Yesterday it was Orthodox Jews.  Today its members of the Family Federation for World Peace (FFWP) - formerly known as the Unification Church.  The SEC has charged Kay Services, LLC, and its sole owner and officer, Marcia Sladich, with orchestrating a Ponzi scheme that bilked at least 1,000 investor of more than $10 million.  (more…)

Don’t Trust the Person You Trust Most

Sunday, August 17th, 2008

Give scam artists credit; they know that a personal recommendation trumps a good sales pitch.  They therefore ingratiate themselves with people who are in a position to influence others.  Pastors and Rabbis have tremendous influence and therefore often find themselves used as unwitting cohorts in financial scams.  The Wall Street Journal reports that Rabbi Chaim Silver of the B’nai Israel Congregation in Norfolk, Virginia, found himself in that position.  When members of his congregation called to ask what Rabbi Silver thought of Joseph Shereshevsky, Rabbi Silver described Shereshevsky as ”kind, generous, and trustworthy.”  Federal prosecutors claim that, armed with Silver’s endorsement, Shereshevsky collected more than $250 million in a Ponzi scheme aimed at fleecing Orthodox Jews.    (more…)

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