Charles “Chuck” E. Hays, of Rosemount, Minnesota, was arrested today and faces charges of fraud and misappropriation of funds related to a $5.5 million Ponzi scheme, according to a complaint filed in the U.S. District Court for the District of Minnesota on February 5, 2009.
The U.S. Commodity Futures Trading Commission (CFTC) alleges that Hays and his company, Crossfire Trading, LLC, fraudulently solicited investments from at least three individuals and a charitable foundation beginning in January 2006. Investors were led to believe their money would be used to trade stock index and crude oil futures.
The CFTC claims Hays falsely represented that Crossfire consistently generated profits, providing fabricated account statements to investors. These statements, some using the letterhead of legitimate brokerage firms, indicated a trading account balance exceeding $37 million, despite the fact that no such account existed. Crossfire, according to the complaint, never engaged in active commodity futures trading.
Investigators discovered Hays allegedly misappropriated investor funds, including a $4 million purchase of a yacht. The CFTC has secured a statutory restraining order to freeze assets and preserve records.
“Hays ran his Ponzi scheme from his yacht, but was grounded when the tide turned as Federal authorities exposed this egregious fraud,” stated Stephen J. Obie, CFTC Acting Director of Enforcement.
The CFTC is seeking preliminary and permanent injunctions against Hays and Crossfire, demanding the return of ill-gotten gains, repayment to defrauded investors, monetary penalties, and full access to financial records. The investigation received assistance from the United States Attorney’s Office for the District of Minnesota, the Department of Justice, the United States Postal Inspection Service, and the Federal Bureau of Investigation.
Source: CFTC.gov
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