This is a second Forex Ponzi scheme halted by the CFTC after it charged Louis Giddens, Anthony Dutton and Michael Gomez with Fraud and Misappropriation in $1.4 Million in Forex Scheme yesterday.
Washington, DC - The U. S. Commodity Futures Trading Commission (CFTC) charged Flint-McClung Capital LLC (FMC) of Englewood, Colo., and Shawon McClung of Denver, Colo., with fraud and misappropriation in an off-exchange foreign currency (forex) Ponzi scheme in which defendants allegedly fraudulently solicited and accepted at least $1.9 million from at least 10 commodity pool participants since March 2010.
On June 23, 2011, the same day the complaint was filed, Judge Christine M. Arguello, of the U.S. District Court for the District of Colorado, Denver Division, issued an emergency order freezing assets in defendants’ bank accounts and prohibiting the destruction of books and records.
According to the CFTC complaint, the defendants solicited pool participants through oral and written solicitations and through a website, www.flint-mcclung.com. In their solicitations, FMC and McClung allegedly created the false impression that FMC was a sophisticated and experienced forex firm. They also falsely claimed that FMC had a cash reserve of almost $100 million, according to the complaint. Between March 2010 and February 2011, more than $2.4 million was allegedly deposited into FMC bank accounts.
The defendants allegedly lured prospective pool participants with the prospect of quickly making large profits with returns such as 50 percent in 30 days or 15 percent a month for six months. FMC and McClung also claimed that participants’ funds were guaranteed from loss and segregated from FMC trading funds, according to the CFTC complaint.
The complaint alleges that in fact FMC and McClung used little, if any, of participants’ funds to trade forex, and no trading accounts in the name of or under the control of the defendants have yet been located. Rather, the defendants, through McClung, allegedly misappropriated at least $596,750 of pool participants’ funds to make Payments of purported profits or the return of principal to other pool participants, as is typical of a Ponzi scheme. Furthermore, McClung allegedly misappropriated funds for personal use, including buying furniture and using approximately $70,000 to purchase automobiles. The complaint alleges that McClung treated the FMC bank account as his personal checking account, making ATM withdrawals and debit card purchases of about $286,000 to pay personal expenses for his apparent benefit and that of his family.
The complaint also charges FMC and McClung with failing to register as a Commodity Pool Operator and Associated Person, respectively.
In its continuing litigation, the CFTC seeks restitution to defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the federal commodities laws.
CFTC Division of Enforcement staff members responsible for this case are Alison B. Wilson, Heather N. Johnson, Erica Bodin, Boaz Green, Gretchen L. Lowe, and Vincent A. McGonagle.
Grab your latest copy of the Forex Magnates Retail Forex Industry Report for Q1 2011.
