HOUSTON (CN) - A Texas man owes more than $1.5 million for his role in a foreign currency scheme, a federal judge ruled.
U.S. District Judge Lee Rosenthal on Monday ordered Mark Rice, of Sugar Land, Texas, to pay $827,000 in restitution and $673,000 in civil penalties. The consent order of permanent injunction settles a suit filed by U.S. Commodity Futures Trading Commission against Rice and his company, Financial Robotics Inc., in 2011.
According to the 25-page order, the defendants solicited $10.4 million from one investor for foeign exchange trading in 2006 and told him that they had developed automated forex software trading programs that generated "phenomenal" returns of over 30 percent per month in tests and profits of 10 to 15 percent per month in actual trading.
"Rice falsely told his customer, among other things, that his investment was 'risk free' and insured against loss and that the return of his principal was guaranteed," the CFTC said in a statement Wednesday. "The order further finds that Rice misappropriated at least $576,000 of his customer's funds by transferring the money to unrelated Rice-controlled companies and, thereafter, spending at least $404,000 of those funds for Rice's personal and business expenses."
Rice purportedly guaranteed the investor he would not lose his principal investment, and that there was an insurance policy in place to protect the principal.
The investor later demanded the return of his principal, but the defendants only returned approximately $773,000 after Copeland admitted all funds had been lost in trading, according to the order.
Other entities under Rice's control include FinRob and Bison Holdings Inc., Commodity Futures and Options Services Inc., Corporate Services Inc., Deposit Capital Inc., InventBay Holdings Inc., Lanxide Corp., Nemaha Inc., Texana Inc. and U232 Inc., the CFTC said.
Financial Robotics could not be reached for comment Wednesday afternoon.