Now the regulation watchdog has uncovered another one: Investors’ money allegedly used to purchase an 88-acre farm, private plane rentals, and luxury vacations; court freezes assets
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that it charged Sidney S. Hanson, Charlotte M. Hanson and their companies Queen Shoals, LLC; Queen Shoals II, LLC; and Select Fund, LLC (collectively, the defendants), all of Charlotte, North Carolina, with operating a Ponzi scheme involving more than $22 million in connection with off-exchange foreign currency futures (forex) trading.
According to the CFTC’s complaint, the defendants, from at least June 18, 2008 to the present, fraudulently solicited at least $22.5 million from individuals and entities to trade forex, among other things, on their behalf. The defendants allegedly operated a Ponzi scheme and misappropriated millions of dollars.
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In both their personal and website solicitations, the defendants falsely claimed success in trading forex, guaranteed customers profits through the use of silver and gold bullion-backed “non-depletion accounts,” and represented that there would be no risk to customers’ principal investment, the complaint alleges. The defendants allegedly falsely represented that a non-depletion account guarantees that the customer will receive the return of invested principal and the promised “interest.”
The complaint also alleges that the defendants lured prospective customers with promises of returns of 8 percent to 24 percent through customers investing via promissory notes for terms of one to five years; customers who committed to the longest monthly terms were promised the greatest “profits.” The defendants claimed to pool customers’ funds and use the profits purportedly generated by trading forex, along with gold and silver bullion, to guarantee payments to customers at the end of the five-year promissory note period.
In reality, the complaint alleges, the defendants deposited little or no customer funds into forex trading accounts. Rather, the defendants misappropriated customer funds to finance the Hansons’ personal expenses, including the purchase of an 88-acre farm, private plane rentals and luxury vacations. Defendants also allegedly used customer funds for purported profit payments or the return of principal to existing customers, similar to a Ponzi scheme.
All this should have raised a major red flag for the potential victims and I’d like to remind here, again, what should serve as an alert when thinking of making an investment in a high-return investment scheme. When some or all of these conditions apply to your potential money manager – it’s time to take a step back and reconsider all the details.
- Starting through an affinity group and spreading the word from there.
- Promising high monthly dividends on a venture that is inherently risky.
- Having an agreement signed by investors not to divulge their deal.
- Lacking filings to the Internal Revenue Service.
- Charging hefty referral fees early on and late bonuses to encourage fresh inflows.
- Having a “reload” or recovery phase.