The CFTC announced that Jeremiah C. Yancy and his company Longbranch Group International have been ordered to pay $2 million in restitution and civil monetary penalties. A federal court in Texas has found that Yancy and Longbranch ran a foreign exchange (“forex”) Ponzi scheme and misappropriated customer funds.
According to the order, from July 2008 to August 2010 the defendants solicited investors to open forex trading accounts. They promised 20-40% monthly returns, told some investors that the principle in their forex accounts would be guaranteed, and claimed that they managed forex tradings for non-profits for churches and orphanages. These statements are all false, as were the forex accounts that the defendants showed to potential clients with $10 million in funds and huge profits.
Yancy was able to solicit 64 participants for Longbranch’s forex accounts, including members of the Idaho church where Yancy was a pastor. $630,000 of customer funds were sent to Longbranch. The majority of those accounts lost 95% of their funds, a total of $230,000. In at least one case, Yancy made Ponzi payments to a customer to cover up these losses. The defendants also co-mingled investors’ money with their own accounts and used it for personal and business expenses. In total, $462,000 was misappropriated from customers in addition to the funds already lost trading.
In addition to the fine, Yancy and Longbranch are banned from any commodity-related activity, and from ever registering with the CFTC in the future.