DALLAS (CN) – A fraudulent foreign currency trading firm preyed on elderly investors and churchgoers in several states, bilking more than 200 people of more than $8 million, the Commodity Futures Trading Commission claims in Federal Court.
The CFTC sued M25 Investments, M37 Investments, Scott P. Kear Sr., Jeffrey L. Lyon, all of Waxahachie, Texas, and David G. Seaman, of Arlington.
They allegedly took at least $8 million from 224 customers for foreign exchange trading, forex options and commodity futures contracts.
The men operated out of offices in Texas, West Virginia and Mississippi, and many of their victims were elderly people who knew each other through churches, the CFTC says.
The defendants guaranteed monthly returns of 2 percent, annual returns of 24 percent and falsely claimed to be successful forex traders, according to the complaint.
“[The] defendants did not disclose to prospective and existing customers that a significant portion of their funds would not be used for trading,” the CTFC said in a statement. “The defendants also did not disclose that as of at least March 31, 2009, they did not have sufficient assets to pay the promised monthly profits or return principal.”
The scheme began in December 2007 and By March 21 this year the defendants had only $3.9 million in assets – not enough to cover the promised interest payments and return of principal, the CFTC says. But the defendants continued to solicit money from new victims, and got their hands on another $140,000 in May, the CFTC says.
It seeks an injunction, restitution, disgorgement of ill-gotten gains, civil monetary penalties and permanent trading bans.