Forex Fraudster Busted !!!!!

Discussion in 'Forex' started by marketsurfer, Jan 12, 2007.

  1. Fraudster fined $33m for biggest US retail foreign exchange scam
    By Jeremy Grant in Washington

    Published: January 12 2007 02:00 | Last updated: January 12 2007 02:00

    A probe into the biggest US retail foreign exchange scam on record wrapped up yesterday with a $33m (€26m, £17m) fine for a man who solicited millions of dollars from unsuspecting investors to buy 42 luxury cars, eight homes and extravagant entertainment.

    Total fines in the three-year case, which has inv-olved three other co-defendants, previous injunctions and civil penalties, have totalled $150m.

    The case highlights the proliferation of fraudulent foreign exchange schemes involving trading of currencies outside the interbank market and involving products offered to ordinary investors.

    The retail forex market is largely unregulated but the Commodity Futures Trading Commission, the US futures regulator, has the power to pursue alleged fraud since products frequently involve types of currency futures contracts.

    However, fraudsters have been able to escape CFTC action by designing contracts that fall outside many court-defined definitions of a futures contract.

    In the latest scam, Oregon native Russell Cline was found guilty by a US district court of fraudulently soliciting $40m from individuals.

    Gregory Mocek, the commission's director of enforcement, said the case had involved a massive financial fraud.

    "In light of our success in prosecuting retail forex scams over the past four years, we are hopeful that all of those involved in the illegal activity will see that their deceptive business models are becoming less attractive," he said.

    Forex scams account for about 28 per cent of the CFTC's case load.

    According to a court order, Mr Cline and his company, Orion International, orchestrated a scheme starting in 1998 in which he "fraudulently solicited customers to purchase illegal off-exchange forex options and futures contracts by misrepresenting the profits and risks inv-olved in forex trading".

    Mr Cline misappropriated much of the customers' funds to pay for personal expenses and entertainment and to pay others who participated in the scheme to defraud Orion's customers. His purchases included private chartered jets, a river house valued at more than $3m, seven houses worth between $500,000 and $1.5m, and a $500,000 sound system.

    As part of the scheme, Mr Cline provided customers with false account statements and directed the posting of false information on Orion's website regarding trading profits, market conditions and opportunities, the balances in individual investors' accounts, and the reasons for delays in paying customers' withdrawals.

    Mr Cline has been in jail since May after pleading guilty in 2004 to charges of mail fraud and money laundering to a federal grand jury in Portland. He is serving an eight-year sentence and was ordered to pay restitution of $16m.

    Copyright The Financial Times Limited 2007
  2. From Yahoo:

    WILLIAM McCALL, Associated Press Writer
    Fri Jan 12, 12:46 AM ET

    PORTLAND, Ore. - A former currency trader convicted of defrauding hundreds of investors has been ordered to pay more than $33 million in one of the largest fines against an individual sued by the U.S. Commodity Futures Trading Commission.


    However, one of the prosecutors in the criminal case against Russell Cline said the order was "a symbolic victory, unfortunately."

    Cline was sentenced last February to eight years in prison for the investment scam he ran through Orion International Inc., the company he founded in 1998 and led until late 2002.

    Under a plea bargain in the criminal case, Cline admitted he solicited investors through a Web site, brochures and seminars, then falsely represented that their money would be used to trade in foreign currencies, promising returns of more than 60 percent to 200 percent annually.

    Cline was convicted of mail fraud and money laundering after pleading guilty in U.S. District Court in Portland. He was also ordered to pay $14.9 million in restitution.

    U.S. Attorney Karin Immergut said after the sentencing that "victims' lives were ruined, retirements lost, college funds wiped out and bankruptcies realized" because of the investment scam.

    In a separate civil case filed in May 2003, the CFTC joined the Oregon Department of Consumer and Business Services to sue Cline and his company for the fraud.

    U.S. District Judge Garr King signed a final order in the case last month, and the commission announced it Thursday in Washington.

    King ordered Cline to pay nearly $16.6 million in restitution and a fine of $16.6 million.

    In a press release, Gregory Mocek, the commission's enforcement director, called the scam "a massive financial fraud" involving more than $40 million.

    Assistant U.S. Attorney Allan Garten, who prosecuted Cline in the criminal case, said Thursday it was unlikely much of the money would be recovered because Cline had spent so much of it on gambling, prostitutes and expensive cars.

    "There was a lot of wrangling between the CFTC and Cline and Orion but it was like squeezing blood out of a turnip," Garten said.

    The judge also issued a permanent injunction against Cline that prohibits him from directly or indirectly trading commodity futures contracts, options on commodity futures contracts, and transactions in foreign currency that are subject to CFTC jurisdiction.
  3. dmcw

    dmcw Global Futures

    Doesn't it blow you away? When I read stuff like that the first question that comes to my mind is "did he think he was going to get away with it?" I wonder if anyone has any kind of estimate on how many other shops are operating the same way.

  4. dmcw

    dmcw Global Futures

    Although I think he should have gotten more than 8 years. What are the chances he's out walking before the 8 years have been served also?

  5. kazoo


    What I want to know is - why are there other rip-off artists that are still allowed to roam the streets without any prosecution whatsoever!? I'm talking about a scumbag named Zoltan Vass of a former company called FX Trainer. To make a very long story short, he sold victims like me a trading robot called "AutoX". He claimed it was doing fantastic. He gave out the great backtested stats it had been giving for the previous 2 years and pretty much made it sound like it was the greatest thing since sliced bread. I think something like 2000 members (maybe more than that, I can't remember the exact number) shelled out $2500 for it, expecting great things. Well, the problems started right away after recieving it. It would very often miss trades ... it basically was not working correctly. And when it DID take trades, it would lose more than win. As for the stats, I come to find out later the stats were from the company he bought the trading robot from. It was from that COMPANY'S trades that had been previously doing well - not his! What happened was that Zoltan Vass decided to put HIS own trading system into the robot ... without testing it first to see if his system would work with it. Of course, it didn't.

    Zoltan promised he would refund everyone. However, it was a lie. He decided later to refuse to give out refunds and instead closed down his company of FX Trainer and started up another forex company instead. Obviously he closed down the FX Trainer company so he wouldn't have to give refunds.

    So, how can a crook like this get away with ripping off 2000+ people!?!??!! Why do they prosecute other crooks like this Russell Cline guy but not a scumbag like Zoltan Vass??? I don't understand how he can get away with scamming people and not have the legal system come down on him to make him refund a lot of people for a product that didn't work!

    By the way, the forex company he is now running is called The Trading Post. If you come across it, STAY FAR, FAR, AWAY!!!!

    People like this will have to answer to a Higher Power than us one day!
  6. I sorry to hear that you got ripped off Kazoo. That's why I would rather learn , practice and create my own trading system(s) by studying Technical Analysis. The $2,500 could be used to learn in real time with trades. I dont really believe most ( if any ) of the black box systems work that well anyways. And as was stated by the other post on this board, I think the guy in the first example should have gotten more than 8 yrs........... I bet he's out before 5 yrs. And if he was that smart he may have a Swiss bank account and will still live high on the hog.

  7. Did FX Trainer close up? They had a huge office that occupied an entire floor in downtown Vancouver, Canada.

    I went to one of their free seminars a couple of years ago and they were really into the market level marketing to get you to sell their $1000 FX course to your family and friends. How can they expect people who know nothing about FX to sell a $1000.00 FX course?
  8. kazoo


    Yes, I certainly could've used that $2500 for real trades or for any other purpose... because I really don't have a lot of money to burn. I guess I bought into the hype of FX Trainer because it DID at one time have credibility. Refco had called FX Trainer the best forex training company available (this was before Refco themselves scammed people and went bankrupt). And this Zoltan Vass guy was suppose to have been a former high ranking govenment official of some foreign country (I can't remember what country or his exact title). FX Trainer also had other big shots in the company with good credentials. FX Trainer had become one of the biggest forex training companies in the world. Add all that up and that's why I had felt relatively safe and confident with anything FX Trainer recommended. It goes to show that even if someone has good credibility ... that it doesn't guarantee they won't eventually rip you off.

    quickurtle, I totally agree the other crook mentioned in the original post of this thread should definitely have gotten more than a 8 year prison sentence for all the people he scammed. I'm thinking a minimum of 20 years. If it were up to me, I would give these thieves a lot more than that! And there's no question Zoltan Vass should be sharing a jail cell right next to the other guy. Instead, nothing has been done to him. Sometimes things in life are just not fair.
  9. kazoo


    It's true - FX Trainer closed its doors for good after Zoltan Vass decided not to refund the 2000+ members our $2500 each for the AutoX catastrophe. I'm sure he and his cronies from FX Trainer are living high on the hog off all the members' money. Calculate: $2500 x 2000 members = $5,000,000!!

    Is it no wonder why he did not want to refund everyone?

    To show a little fairness to FX Trainer, they DID have good teachers and a good course. However, having said that, my opinion now is that it was too overpriced at $1000. It was multi level marketing and most MLM products are overpriced - just as this was.

    Oh well, all I can do now is live and learn...
  10. Hungary?
    #10     Jan 22, 2007