Couple of weeks ago Herald Tribune reported that a Saratosa company Diamond Ventures LLC is being the subject of both lawsuit by disillusioned investors and an FBI and CFTC investigation.
Both the father,Diet guru Harvey Diamond, who wrote “Fit for Life”, and Beau Diamond his 31-year-old son are in the hot seat over a foreign currency futures trading program that took in roughly $38 million and spun out huge monthly dividends for at least a year and a half before going suddenly — and totally — broke in January.
The 31-year-old’s explanation is that his high-risk Forex play simply capsized in a turbulent world market while more than 200 investors lost their savings.
Now more details surface and they all bear the warning signals that should put all potential ponzi scheme victims on red alert once they note them:
Legal Risk Factor Beneath Ripple’s Lawsuit from SECGo to article >>
1. To become part of “the club,” as Beau Diamond and others called it, an investor had to sign a “participation agreement.” Seems like a legit move.
2. In it, they were promised a specific monthly return of 5 percent. Big no-no sign! Fixed returns especially of double and triple digits a year scream – scam!
3. But to get their high yields, investors had to agree to complete secrecy. Another warning sign, if the program is successful – why not let other people hear about it?
4. Promise of referral fees and sign-up bonuses. This one surely raises an eyebrow as these are signs of money manager being under high pressure to raise new money.
Diamond’s Forex program – purportedly based on “Four Magic Pillars” of currency trading that he told his advocates he had mastered – bears hallmarks laid out in the “Scams and Swindles” publication produced by National Futures Association and “red alerts” for Forex fraud from the U.S. Commodities Futures Trading Commission:
- 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.
But after having lost all his investors’ money Beau concocted an ingenious plan to recover the lost money – he asked for more money for him to manage and earn back the losses. Yeah, where do I sign up for THIS?