The CFTC has obtained a supplemental consent order requiring Sidney Hanson, Charlotte Hanson, and their companies Queen Shoals, Queen Shoals II, and Select Fund to pay $24 million in restitution and civil monetary penalties for running a foreign exchange (“forex”) Ponzi scheme.
Additionally, the supplemental order requires the following six relief defendants to disgorge more than $23.3 million in ill-gotten gains recieved as a result of the defendants’ fraudulent conduct: 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 defendants and relief defendants have already consented to permanent injunctions against any further trading in a previous court order.
According to the original CFTC complaint, beginning in June 2008 the defendants solicited the public to invest with their companies via www.queenshoals.com. Invested funds were purportedly to be placed in forex trading accounts. The defendants claimed that customer funds were guaranteed via “non-depletion” accounts backed by gold and silver bullion. The bullion allegedly protected both an investor’s principal and their 8-12% returns. These payments were to be made after a five-year “promissory note” period.
By making these fraudulent claims, the defendants were able to solicit at least $22 million, ostensibly to trade off-exchange forex on their behalf. However, little or none of the money invested was used to trade forex. Instead, the defendants misappropriated customer funds to make Ponzi payments to other clients, and to pay personal expenses, including the purchase of an 88-acre farm.
Sidney Hanson plead guilty to criminal wire fraud charges earlier this year, and is awaiting sentencing.