Houston, Texas – Willie L. Cloud Jr. is facing charges of operating a Ponzi scheme through his investment company, C & R Financial, Inc., according to a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) on March 4, 2010. The charges stem from alleged fraudulent foreign currency (forex) trading activities.
The CFTC alleges that since at least April 2008, Cloud and C & R Financial solicited at least $200,000 from investors with promises of substantial returns. Customers were reportedly told their investments would double or triple within a year through forex trading gains, and that they would each have personal accounts at a registered futures commission merchant.
However, the complaint details that Cloud opened an account in his own name and only deposited a portion of the collected funds. At least $75,000 of customer money was allegedly misappropriated for personal use. Furthermore, the CFTC claims that false account statements were sent to investors, showcasing fabricated profits while the actual forex trading resulted in significant losses.
Approximately $36,000 was returned to customers as principal redemptions and purported profits, but the CFTC asserts this money came from subsequent investors – the hallmark of a Ponzi scheme. The agency alleges that substantial portions of customer funds were lost in forex trading, leaving the defendants unable to fulfill promised returns without relying on new investments.
On March 9, 2010, Judge Gray H. Miller of the U.S. District Court for the Southern District of Texas ordered Cloud and C & R Financial to appear for a preliminary injunction hearing on April 1, 2010. The CFTC is seeking restitution, disgorgement of ill-gotten gains, civil monetary penalties, and a permanent injunction to prevent further violations of federal commodities laws. The case is being pursued by CFTC staff members Andrew Ridenour, Patrick Pericak, Michael Loconte, Jessica Harris, Kenneth McCracken, Rick Glaser and Richard Wagner.
The matter was last updated on April 2, 2010.
Source: CFTC.gov
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