Charlotte, NC – Sidney S. Hanson is facing charges of operating a $22 million Ponzi scheme involving off-exchange foreign currency (forex) trading, the U.S. Commodity Futures Trading Commission (CFTC) announced August 7, 2009. The CFTC filed a complaint against Hanson, along with his wife Charlotte M. Hanson, and their companies Queen Shoals, LLC; Queen Shoals II, LLC; and Select Fund, LLC.
The complaint alleges that from at least June 18, 2008, the Hansons fraudulently solicited at least $22.5 million from investors to trade forex on their behalf. The CFTC claims the operation functioned as a Ponzi scheme, with funds misappropriated for personal expenses.
According to the CFTC, the Hansons falsely claimed success in forex trading, guaranteeing profits through “non-depletion accounts” backed by silver and gold bullion, and representing a complete absence of risk to invested principal. They allegedly promised returns of 8 to 24 percent through promissory notes ranging from one to five years, with longer terms linked to higher promised “profits.”
However, the complaint states that little to no customer funds were actually used for forex trading. Instead, the Hansons allegedly used the money to fund their lavish lifestyle, including the purchase of an 88-acre farm, private plane rentals, and luxury vacations. Funds were also used to make payments to earlier investors, characteristic of a Ponzi scheme.
On August 4, 2009, the U.S. District Court for the Western District of North Carolina issued an order freezing the assets of the Hansons and their companies, as well as six relief defendants named in the lawsuit: Secure Wealth Fund, LLC; Heritage Growth Fund, LLC; Dominion Growth Fund, LLC; Two Oaks Fund, LLC; Dynasty Growth Fund, LLC; and Queen Shoals Group, LLC. The court also permitted the CFTC to seize and preserve all relevant records.
The defendants agreed to a consent order of permanent injunction, prohibiting further trading and violations of federal commodities laws. The court will determine the amount of restitution to customers, disgorgement of ill-gotten gains, and civil monetary penalties at a later date. The North Carolina Department of the Secretary of State, Securities Division, and the Federal Bureau of Investigation provided assistance in the investigation.
Source: CFTC.gov
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