Ronald W. Smith Jr., 41, of Vansant, Virginia, was hit with a hefty penalty and permanent trading ban after a federal court found him guilty of running a $1.4 million Ponzi scheme through his company, Safeguard 3030 Investment Club. The judgment, entered on April 16, 2012, in the U.S. District Court for the Western District of Virginia, orders Smith to pay a $2,008,251 civil monetary penalty and $1,064,923 in restitution to defrauded customers.
According to the CFTC’s investigation, Smith fraudulently solicited funds from approximately 74 individuals between January 2009 and February 2010, promising a 30 percent return every 30 business days on off-exchange foreign currency (forex) contracts. He enticed investors with fabricated claims of trading expertise and a successful track record, showcasing false account statements to mask the scheme.
The court found that Smith never actually traded the customer funds. Instead, he misappropriated the entire $1.4 million, using it to pay earlier investors – a hallmark of a Ponzi scheme – fund his company Tigre Systems, Inc., and finance a lavish lifestyle. Purchases included three Dodge automobiles, a pool and pool house, home furnishings, and frequent visits to the luxury Martha Washington Inn.
Smith’s wife, Angela A. Duty Smith, and Tigre Systems, Inc. were also ordered to disgorge ill-gotten gains totaling $188,842 and $1,242, respectively. This case runs parallel to a criminal investigation led by the U.S. Attorney’s Office for the Western District of Virginia. Smith, along with his wife and accomplice Terrance K. Cunningham, faced criminal charges including wire fraud and money laundering.
On June 30, 2011, Smith pleaded guilty. Angela Smith and Cunningham were found guilty on all counts following a jury trial on August 4, 2011. All three received prison sentences on March 30, 2012: Smith received 11 years and three months, Angela Smith received three years, and Cunningham received seven years. The CFTC acknowledged the assistance of the U.S. Attorney’s Office in bringing Smith and his co-conspirators to justice.
Source: CFTC.gov
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