$11 Million Latin American Ponzi Alleged

(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 three organizers. According to the federal complaint in Chicago, the defendants "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 the Guatemalan company Mercados de Futuros.

Abbreviating the company's name as MDF, the complaint says its managing director, Raul Alfonso Giron Galvez, "is currently incarcerated in Guatemala for his participation in the activities described herein." Neither MDF nor Giron are parties to the complaint.

The investors claim that one of the Alaron officers 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.

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