US Regulator Continues to Haunt Queen Shoals Fraudsters - Issues $5.76 million Penalty

Financial regulators in the United States have been showcasing their might in the unfolding of a multi-million dollar scam that duped innocent investors. The Commodity Futures Trading Commission (CFTC ), the US financial watchdog, reported that it obtained a federal court Order which requires a Florida-based couple to pay a fine of $5.76 million for operating an unregulated investment scheme.

The case is related to charges made by the CFTC in March 2011. A complaint was filed in the U.S. District Court for the Western District of North Carolina where Gary D. Martin, and Brenda K. Martin were alleged to have been involved in an FX Ponzi Scheme .The husband and wife from Florida had collected over twenty-two million dollars during 2008 and 2009. The latest notification reinforces the hard stance regulators must adopt after the embarrassing Madoff scandal that shocked America.

The CFTC reported that both defendants will be required to pay the fine under the court order. The couple were running the scam under the company, Queen Shoals Consultants, (QSC) a North Carolina registered firm.

The Martins were charged by the authorities for running an FX Ponzi scheme. In the findings, the regulator states that the duet were part of the wider, Queen Shoals group of firms or ‘Entities’. During their discourse, the pair would solicit individuals and promote their false claims.

The Martins were not alone in their mischief, the mastermind behind the main scam was also Florida resident, Sidney Hanson. He established his fictitious ‘scheme’ in 2006 whereby he falsely sold private loans and other securities products to over 500 investors. The Martins were part of the wider Queen Shoals scam (with Hanson) as they would transfer clients' funds to Hanson for a referral fee and Hanson would pay the couple 5%, details state that the two earned $1.44 million in referral commissions.

Hanson was found guilty of fraud and consequently sentenced in 2011.

The Queen Shoals Consultants concept was promoted through a website the Martins had created; www.queenshoalsconsultants.com. The firm they operated through was focused on financial trading, with an emphasis on transactions in the precious metals and currency market. The couple claimed that they had over 20 years of experience trading in financial markets, a claim Gary Martin refuted under oath during the case.

The height of the fraud committed by the Martins and Hanson shows the vulnerability of investors. Regulators and governments from across the globe have looked at ways to develop and educate the investor community by providing information on investment products, the CFTC has a fraud advisory section on its website.