Denver, CO – Shawon McClung, of Denver, Colorado, has been charged with fraud and misappropriation in connection with a $1.9 million Ponzi scheme involving off-exchange foreign currency (forex) trading, according to a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) on June 23, 2011.
McClung, along with his firm Flint-McClung Capital LLC (FMC), allegedly fraudulently solicited funds from at least 10 investors starting in March 2010. The CFTC alleges that McClung and FMC created the false impression of being a sophisticated and experienced forex firm, falsely claiming a $100 million cash reserve. Investors were promised high returns, such as 50 percent in 30 days or 15 percent monthly for six months, and were told their funds were guaranteed and segregated.
However, the CFTC complaint states that little to no investor funds were actually used for forex trading. Instead, McClung allegedly misappropriated at least $596,750 of investor funds to pay earlier investors – a hallmark of Ponzi schemes. He is also accused of diverting approximately $70,000 to purchase automobiles and using around $286,000 for personal expenses, treating the FMC bank account as a personal checking account with ATM withdrawals and debit card purchases.
The CFTC further alleges that McClung and FMC failed to register as a Commodity Pool Operator and Associated Person, violating federal commodities laws. Judge Christine M. Arguello of the U.S. District Court for the District of Colorado issued an emergency order on June 23, freezing the defendants’ bank accounts and prohibiting the destruction of records.
The CFTC is seeking restitution for defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations. The case is being handled by Alison B. Wilson, Heather N. Johnson, Erica Bodin, Boaz Green, Gretchen L. Lowe, and Vincent A. McGonagle of the CFTC’s Division of Enforcement.
Source: CFTC.gov
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