Alaron-backed Ponzi scheme scammed Guatemala Congress for $11M

Discussion in 'Wall St. News' started by latinotrader, Sep 1, 2010.

  1. $11 Million Latin American Ponzi Alleged
    By KEVIN KOENINGER

    (CN) - Investors say a Latin American corporation took them for $11 million in a Ponzi scheme, and charged exorbitant commissions on futures trading along the way. The 18 plaintiffs claim that Alaron Trading Corp. charged them "$42 per round turn contract, almost three times the going rate, and shared the grossly inflated commission charges" with a Guatemalan company.
    The 18 individual and corporate plaintiffs sued Alaron Trading Corp. dba Alaron Latin America, and its organizers, Alberto Alvarez, Jose Ortega and Alberto Tarafa. According to the complaint in Chicago Federal Court, the "regularly traveled to Guatemala and other Latin American countries to participate in marketing and promotion events to solicit and induce potential investors to open accounts."

    The plaintiffs say the defendants shared their "grossly inflated commission(s)" with Mercados de Futuros (MDF), a Guatemalan company run by Raul Alfonso Giron Galvez, its managing director.
    Neither MDF nor Giron are named as defendants in this case. However, "Giron is currently incarcerated in Guatemala for his participation in the activities described herein," according to the complaint.

    The investors claim that Alberto Tarafa assured them that "Giron was one of the five best and highly profitable traders in South America" and that "Alaron was very selective in its choice of traders and would only work with the best."

    Once the investors were hooked, they gave the defendants the power to trade at will, and "in the course of their trading on behalf of the plaintiffs, MDF and Giron aggressively traded and consistently lost money," according to the complaint.
    To cover up the losses, "MDF provided its own monthly statements to customers that were intentionally misleading and deceitful," the complaint states.

    Investors say they lost more than $11 million in the Ponzi scheme. They say they realized it was a scam when "the MDF offices were finally shut down as a result of a Guatemalan governmental criminal investigation."
    The plaintiffs seek punitive damages for conspiracy, fraud, negligence, unjust enrichment and other charges. Their lead attorney is Timothy Carey with Dewey & LeBoeuf.
    http://www.courthousenews.com/2010/06/10/27968.htm