MIDDLEVILLE, MI – Jeffrey L. Groendyke, 54, is facing charges of fraud and misappropriation following a CFTC enforcement action announced May 4, 2011. Groendyke operated an off-exchange foreign currency (forex) Ponzi scheme through his business, JG Forex Fund (JGF), allegedly defrauding at least 54 customers out of at least $953,305 since May 2010.
The Commodity Futures Trading Commission (CFTC) complaint alleges Groendyke misappropriated at least $600,000 in customer funds for personal use and to pay earlier investors – a hallmark of a Ponzi scheme. He also allegedly used customer funds to trade futures contracts in a personal account without disclosing this to investors.
On May 3, 2011, U.S. District Court Judge Robert J. Jonker of the Western District of Michigan issued an emergency order freezing Groendyke’s trading accounts and prohibiting the destruction of relevant financial records.
According to the complaint, Groendyke primarily targeted members of his church in Middleville, Michigan, representing himself as a successful trader with a profitable track record, offering a “long term investment” suitable for retirement funds. He allegedly falsely claimed to generate monthly profits ranging from 6.37 percent to 42 percent. However, the CFTC alleges that Groendyke used less than half of the solicited funds for actual forex trading and lost over 88 percent of those funds.
To conceal the scheme, Groendyke is accused of providing false account statements to customers. As of December 31, 2010, he allegedly claimed to have $1,548,679 under management, while his forex accounts held less than $100.
The CFTC is seeking restitution for defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against future violations of federal commodities laws. Groendyke has never been registered with the CFTC.
The case is being prosecuted by Susan Gradman, Joseph Patrick, Scott Williamson, Rosemary Hollinger and Richard Wagner of the CFTC Division of Enforcement.
Source: CFTC.gov
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