Sidney J. Charles, Jr., 48, of Bowie, Maryland, has been ordered to pay $604,236 in restitution and penalties for operating a fraudulent foreign currency (forex) Ponzi scheme, the Commodity Futures Trading Commission (CFTC) announced August 26, 2013. The federal court order, entered August 23, 2013, by Judge Paul W. Grimm of the U.S. District Court of the District of Maryland, permanently bans Charles and his company, The Borrowing Station, LLC, from trading and soliciting investments.
The CFTC initially filed a complaint in April 2012, alleging solicitation fraud, misappropriation of funds, false statements, and registration violations. The investigation revealed that from October 2009 through July 2011, Charles and The Borrowing Station fraudulently solicited $369,326 from 18 investors for a pooled investment vehicle trading forex.
Prosecutors say Charles promised investors substantial returns—up to 25 percent annually or 10 percent monthly—and falsely guaranteed against trading losses. However, the CFTC found that only a portion of the funds were actually used for trading, and the majority were lost. Any “profits” paid to investors were simply redistributed principal from new investors, characteristic of a Ponzi scheme.
Furthermore, the Order detailed that Charles misappropriated investor funds to cover personal expenses and operational costs for The Borrowing Station. Both Charles and his company failed to register as required under the Commodity Exchange Act and CFTC Regulations.
In addition to the $350,000 civil monetary penalty, Charles is jointly and severally liable with The Borrowing Station, LLC, for $254,236 in restitution to the defrauded investors. The CFTC collaborated with the U.K. Financial Conduct Authority during the investigation.
Source: CFTC.gov
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