CFTC Charges Robert Christy and Crabapple Capital Group with Forex Fraud

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that on April 19, 2012, Judge Richard W. Story of the U.S. District Court for the Northern District of Georgia, entered an emergency order freezing the assets of defendants Robert A. Christy of Milton, Ga., and his company Crabapple Capital Group LLC (Crabapple) of Alpharetta, Ga. The order also prohibits the defendants from destroying or altering books and records. The judge set a hearing date for May 1, 2012.

The order stems from the filing of a federal court action on April 19, 2012, against the defendants, charging them with foreign currency (Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term) fraud, misappropriation, and making false statements to the National Futures Association (NFA). Both Christy and Crabapple are registered with the CFTC and are NFA members.

The CFTC complaint alleges that from at least October 2008 to the present, Christy and Crabapple have defrauded at least 20 commodity pool participants who invested at least $1,311,000 in a commodity pool that trades forex and is operated by Crabapple.

According to the complaint, the defendants portrayed Crabapple as a reputable and well-established investment firm, claiming that Crabapple traded forex profitably since 2006 and is affiliated with a larger investment firm, which purportedly has over $50 million in assets under management. The CFTC complaint further alleges that instead of using pool participants’ money to trade forex, defendants used it to pay for, among other things, Christy’s travel, restaurant meals, groceries, and other personal expenses, as well as Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term to members of Christy’s family. In total, defendants allegedly misappropriated at least $800,000.

In their sales solicitations, according to the complaint, the defendants advertise a “conservative” forex investment strategy that targets annual returns of approximately eight percent with a low risk of loss. Defendants gave prospective customers marketing literature, including a formal disclosure document and monthly bulletins, which showed from 2006 to 2011: (a) average annual returns ranging from 15 percent to 20 percent; (b) 55 profitable months compared to only 10 unprofitable ones; and (c) the highest monthly losses reaching only negative 0.74 percent. According to the complaint, however, this performance history was a lie, as the defendants’ actual forex trading records show consistent and significant losses from 2006 to 2011. The complaint alleges that defendants’ claim that Crabapple had $50 million in assets under management was likewise false.

In order to perpetuate their fraud and misappropriation, the defendants allegedly prepared and distributed to pool participants false monthly account statements that showed pool participants earning purported monthly profits on their investments, even in months when defendants were losing money in all of their forex trading accounts, according to the complaint.

More details here.