Chilean police are probing a forex investment management company named IM Forex that according to authorities was connected to a massive Ponzi scheme named AC Inversiones (literally translated as AC Investments). The firm was promising its investors 6 per cent per month if they invest with it over $15,000.
The company has been charged with fraud as police reports allege that the Ponzi scheme might have used the funds of clients to make highly leveraged bets on currency moves in order to finance the massive returns that were promised to about 1,500 investors (7.5 per cent per month).
The firm was closed last Friday, as its CEO Victor Pantoja issued a statement elaborating that the accusations against the company are false. The company’s top executive claims that the operations of the brokerage have been suspended voluntarily and that it is fully cooperating with authorities investigating the matter.
A group of clients of IM Forex have filed a lawsuit claiming that the company has about 1,500 clients, whose funds are allegedly misappropriated.
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The defendant of IM Forex, Rodrigo González, asserts that the case is a “witch hunt” against investment companies. The comment comes after allegations that the connected company AC Investments may have misappropriated over $75 million (50 billion Chilean pesos).
The lawyer also confirmed in his statement that IM Forex and AC Investments do not have financial difficulties and that other companies from the industry would be wise to support the fight of the firm against “unfair accusations”.
With claims that the forex company has had close to $100 million in capital, the doubts about its good intentions can only grow, considering the typical amount of capital that companies in the industry are holding.
The Latin American markets are relatively new to the idea of foreign exchange trading and Ponzi schemes do have the prospect of being more successful. Last year Finance Magnates reported on a number of Russian Ponzi schemes that were promising substantial returns on investment to its clients.
The main rule when identifying online investment fraud is to look for outrageous investments. To date no serious fund manager has been able to warrant any amount of return to its clients, save perhaps for Bernie Madoff, who was considered legit for decades before his fund folded in 2008.