The Commodity Futures Trading Commission (CFTC) announced on Jan. 15 its Foreign Currency Fraud Task Force had filed its first case. Its target: accused Ponzi schemer James Ossie, sole proprietor of Alpharetta, Ga.- based CRE Capital Corporation. The CFTC alleges the scheme involved more than 100 duped investors and approximately $25 million.
Ossie had promised investors a 10-percent return within 30 days by trading U.S. and Japanese currency pairs. However, since June 18, 2008, Ossie supposedly lost $4.4 million in foreign currency trading.
Fraudsters perpetuate Ponzi schemes by paying off old investors using the money invested by new investors. The scheme can continue as long as there’s a flow of new investments. However, once the fund fails to pull in enough money to keep up payments to existing “clients,” it collapses. Several Ponzi schemes have come to light since the high-profile, multi-billion-dollar fraud operated by Bernard Madoff was revealed in December.
This is not a coincidence, according to the CFTC.
“We are seeing an uptick in Ponzi-scheme cases because, in this economic climate, new investors cannot be found to perpetuate the scheme,” says CFTC Acting Director of Enforcement Stephen J. Obie.
The CFTC’s Forex Fraud Task Force was created after the passage of the Food, Conservation, and Energy Act of 2008, which clarified and strengthened the CFTC’s authority over foreign currency contracts. Between 2000 and the passage of this act in 2008, the CFTC had filed nearly 100 enforcement actions involving the illegal sale of forex futures and options contracts, recovering investor losses totaling $450 million.
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