Clinton Township, MI – March 15, 2011 – Alan James Watson, along with Cash Flow Financial LLC and Michael S. Potts, are facing charges of fraud following a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the Eastern District of Michigan. The defendants are accused of fraudulently soliciting at least $45 million from over 600 investors for a commodity pool intended to trade futures contracts and securities.
According to the CFTC, Watson and Potts failed to disclose critical information to investors, including the alleged misappropriation of funds for personal use and to maintain a Ponzi scheme. Watson is also accused of using misappropriated funds to cover losses related to a prior Ponzi scheme involving Safevest LLC.
The complaint alleges that Watson and Potts falsely claimed the commodity pool was profitable and that all funds were being traded by a Florida-based investment club, Trade LLC. However, of the $45 million raised, only $8.1 million was actually traded, according to the CFTC. Trade LLC is also the subject of a separate enforcement action.
To conceal trading losses and the alleged misappropriation of funds, Watson reportedly issued false statements indicating monthly profits of at least 10 percent, despite substantial losses. A restraining order freezing the defendants’ assets, prohibiting the destruction of records, and appointing a receiver was issued on March 11, 2011, by U.S. District Court Judge Lawrence P. Zatkoff.
The CFTC has named The Jedburgh Group as a relief defendant, alleging it holds at least $3 million in recovered pool participant funds in escrow. The agency is seeking disgorgement of these funds.
The CFTC is seeking restitution, ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against Watson, Potts, and Cash Flow Financial LLC. The investigation remains ongoing as the CFTC attempts to locate and account for all pool participant funds.
Source: CFTC.gov
Related Federal Cases
- Cemhan Biricik, COVID Test Health Care Fraud, Michigan 2024 · New York
- Northern Michigan Woman Charged in $7.5 Million Wire Fraud Scheme · Washington
- Wayne Smith, Medicare Fraud, Michigan 2009 · Delaware
- Tasis Brothers and Alayon, $9.1M Medicare Fraud, Michigan 2007 · Delaware
- Four Detroit Men Sentenced for Credit Card Fraud, Michigan 2017 · Washington
MORE FEDERAL CRIME NEWS
US NewsUS NewsUS NewsUS News