HOUSTON (CN) – An unregistered foreign exchange trader bilked a Ponzi scammer for $10 million, which came from a “separate and distinct Ponzi scheme” that brought the first Ponzi man $45 million, the Commodity Futures Trading Commission says.
The CFTC secured a preliminary injunction this week against Financial Robotics and its “apparent owner and manager” Mark Rice, who allegedly bilked a Ponzi scammer for $10.4 million. The first Ponzi man is in federal prison.
Rice, of Sugar Land, and his company, based in Spring, claimed to be foreign currency traders, though neither was registered with the CFTC, according to the complaint.
The CFTC claims that Rice and Financial Robotics (FinRob) fraudulently solicited $10.4 million from Robert P. Copeland, ostensibly “to trade leveraged or margined foreign currency transactions” on Copeland’s behalf.
Ironically, or perhaps suitably, Copeland got the money that he lost to Rice from his own “separate and distinct Ponzi scheme” which netted him $45 million before he was sent to prison, the CFTC says.
In a footnote to its federal complaint against Rice and FinRob, the CFTC says: “Copeland obtained the funds that he invested with defendants through his fraudulent solicitation of at least $45 million from at least 125 individuals in a separate and distinct Ponzi scheme concerning investment in real estate financing and/or development. Copeland confessed to his involvement in the Ponzi scheme and is currently serving a 121 month sentence at the Federal Prison Camp, Maxwell Air Force Base,” in Alabama.
After Copeland lost money the first time he gave it to Rice to “manage,” Rice persuaded him to feed him the money directly, rather than put it in a trading account with a futures commission merchant, the CFTC says.
Rice told Copeland for more than a year that he was making money, until November 2008, when he said he had lost it, according to the complaint.
Copeland eventually got $2.7 million back, though Rice had promised him the entire $10.4 million was risk-free.
The CFTC obtained a subpoena to delve into Rice and his company’s investments, but Rice would not cooperate. So the CFTC on June 29 filed a request for a restraining order and expedited discovery.
U.S. District Judge Lee Rosenthal issued a temporary restraining order and appointed Kelly Crawford as temporary receiver in June.
Rosenthal granted the preliminary injunction on Monday.