Clinton Township, MI – Alan James Watson, 47, was sentenced to 12 years in federal prison for running a $40 million investment club scam in Virginia and nationwide.
Watson, who served as chief executive officer of Cash Flow Financial LLC, was found to have fraudulently solicited and accepted nearly $40 million from over 900 members of the investment club. He promised a 10 percent monthly return on investment, but instead lost nearly all of the money through non-disclosed, high-risk investments.
According to court documents, Watson created CFF in 2004 and received almost $40 million from investors between 2006 and 2009. He purported that the money would be invested through an equities-trading system developed by an expert consultant, Trade LLC, but only $6 million was ever invested in Trade LLC, while the remaining $34 million was secretly invested in miscellaneous, high-risk ventures without the consent of investment club members.
Watson was also ordered to forfeit $36,615,344. U.S. District Judge Gerald Bruce Lee in the Eastern District of Virginia sentenced Watson to three years of supervised release. Watson pleaded guilty to one count of wire fraud on Sept. 22, 2011.
“Mr. Watson deceived members of his investment club from early on and drove his scheme deeper and deeper while investors remained none the wiser,” said Assistant Attorney General Lanny A. Breuer. “His lies destroyed lives, and today’s sentence ensures he will pay for his destructive actions.”
The FBI’s Washington Field Office, USPIS, the CFTC and the U.S. Attorney’s Office for the Eastern District of Virginia investigated the case. The Commodity Futures Trading Commission has filed a related civil case in the Eastern District of Michigan.
“The pitch Mr. Watson made to investors was a big fat lie, and he kept lying until his scheme collapsed and investors lost nearly everything,” said U.S. Attorney Neil H. MacBride. “Based on these lies, investors recommended Mr. Watson’s club to their friends and family, and the damage to these relationships was just as harmful as the financial devastation itself.”
The FBI has prioritized investigating white collar crime, and this case is a prime example of the devastating consequences of such crimes. Watson’s actions have left over 900 investors with significant financial losses.
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