At the request of the U.S. Securities and Exchange Commission (“SEC”), a federal court in Minnesota has shut down an alleged foreign currency trading scam that raised more than $190 million from more than 1,000 investors worldwide. According to the SEC, Trevor G. Cook and Patrick J. Kiley, both of Minnesota, used a number of companies and shell companies in connection with the scam. The companies allegedly involved include UBS Diversified Growth LLC, Universal Brokerage FX Management LLC, Oxford Global Advisors LLC, Oxford Global Partners LLC, Basel Group LLC, Crown Forex LLC, Market Shot LLC, PFG Coin and Bullion, Oxford FX Growth L.P., Oxford Global FX LLC, Oxford Global Managed Futures Fund L.P, UBS Diversified FX Advisors LLC, UBS Diversified FX Growth L.P., and UBS Diversified FX Management LLC.
According to the SEC, the defendants promised investors a guaranteed return of 10 to 12 percent per year, with absolutely no risk. The defendants supposedly generated those returns through currency trading.
The SEC also alleges that the Cook and Kiley misappropriated more than $42 million of the $190 million they raised. Cook allegedly transferred $12.8 million to Panama to construct a casino, $2.8 million to acquire a local mansion, and $4.8 million for gambling losses. The defendants allegedly used $51 million to make Ponzi payments to maintain the illusion of success and extend the life of the scheme.
Notice that the defendants promised returns between 10 and 12 percent. Bernie Madoff taught scamsters that promising a return within the realm of reason will allow them to gather more investors and keep their scams running longer. All ’smart’ scamsters have learned the lesson. That means that future scams will be harder to spot. You will no longer be able to evaluate them simply by whether they promise outrageous returns. You need professional advice from someone who has seen hundreds of professionally designed scams.
