Washington, D.C. – February 16, 2011 – Federal authorities have frozen the assets of Keith F. Simmons of West Jefferson, North Carolina, and three associates in connection with a $35 million Ponzi scheme involving foreign currency (forex) trading. The Commodity Futures Trading Commission (CFTC) obtained a court order on February 16, 2011, also barring the defendants from destroying financial records and scheduling a hearing for a preliminary injunction on February 23, 2011.
Also named in the complaint, filed January 13, 2011, in the U.S. District Court for the Western District of North Carolina, are Bryan Coats of Clayton, North Carolina, and Jonathan Davey of Newark, Ohio. Deanna Salazar and her husband, Lawrence Salazar, along with multiple corporate entities controlled by the group, are also implicated in the fraud.
The CFTC alleges that from April 2007, the defendants fraudulently solicited at least $35 million from over 240 investors, promising returns through a non-existent Black Diamond trading platform. They falsely claimed a three-year history of successful forex trading with average monthly profits exceeding four percent. The defendants allegedly misrepresented the trading system as being developed by qualified professionals and downplayed the inherent risks of forex trading.
According to the complaint, no actual forex trading occurred. Instead, customer funds were used to pay earlier investors – a hallmark of a Ponzi scheme – and were diverted for personal expenses. These included starting unrelated businesses, cash withdrawals, luxury trips (including a skydiving excursion), household services, vehicle purchases, home renovations, and real estate acquisitions, including a 47-acre property and a lavish residence.
The defendants allegedly concealed the scheme by issuing falsified account statements showing fictitious trading profits. When customers began requesting withdrawals in 2009, the defendants reassured them their funds were secure while continuing to solicit new investments and fabricate positive returns on monthly statements.
The CFTC’s complaint seeks full restitution for defrauded investors, civil penalties, and a permanent ban from engaging in commodity trading. The investigation remains ongoing.
Source: CFTC.gov
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