The Securities and Exchange Commission filed fraud charges Thursday against the CEO of a purported foreign currency trading firm, alleging he scammed hundreds of investors with false promises of high, fixed-rate returns while secretly using their money to fund his start-up alternative newspaper.
First Capital Savings & Loan Ltd. Chief Executive Jeffery A. Lowrance, who had fled to Peru and was arrested there earlier this year, was arraigned today on criminal fraud charges in a 2010 indictment filed by the United States Attorney’s Office for the Northern District of Illinois. In addition, the Commodity Futures Trading Commission filed fraud charges Thursday against Lowrance and First Capital.
The SEC alleges that Lowrance raised approximately $21 million from investors in at least 26 states, including California, Oregon, Illinois and Utah, by promising huge profits from a specialized foreign currency trading program. First Capital actually conducted little foreign currency trading, lost money on the little trading that it conducted, and never engaged in any profitable business operations. Lowrance targeted certain investors by purporting to share their Christian values and their limited-government political views. He solicited investors through, among other things, ads in his start-up newspaper USA Tomorrow, which he distributed at a September 2, 2008 political rally in Minneapolis, Minnesota.
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“Lowrance ironically portrayed himself as a crusader against corruption in government, while he ripped off investors who put their trust in him,” said Marc Fagel, Director of the SEC’s San Francisco Regional Office.
The U.S. Commodity Futures Trading Commission (CFTC) announced that it charged Jeffery Alan Lowrance formerly of Houston, Texas, and his New Zealand-registered company, First Capital Savings and Loan (FCSL), with operating a Ponzi scheme that fraudulently solicited at least $1 million from approximately 36 members of the general public to trade off-exchange foreign currency (forex) contracts. Defendants allegedly have misappropriated most of these funds.
The CFTC complaint, filed in the U.S. District Court for the Northern District of Illinois on July 14, 2011, alleges that, from at least June 18, 2008 to the present, Lowrance and FCSL in their solicitations falsely claimed to be successful forex traders and promised customers fixed monthly returns ranging from 1.1 percent to at least 4.15 percent on their investment. To conceal and perpetuate their fraud, the defendants allegedly provide their customers with access to bogus account statements that falsely show that their accounts are increasing by as much as 4.15 percent per month.