Forex and commodities Ponzi schemers fined $8 million

The CFTC announced that Ruben Gonzalez, Jose Naranjo, and their company New Golden Investment Group, LLC (“NGI”) have been ordered to pay $8 million in disgorgement, restitution, and civil monetary penalties. A federal judge in California has found that the defendants ran a multi-million dollar foreign exchange (“forex”) and commodities Ponzi scheme by which they fraudulently solicited community members and misappropriated millions for personal expenses.

The order finds that, beginning in August 2008, the defendants solicited funds from the Spanish-speaking community of Los Angeles purportedly to trade forex and commodity futures. They advertised in print, on radio, and on the web that investors could “make 100%” and “double” their money on energy commodities, precious metals, real estate, and forex, with no risk of loss. To “close” potential deals, prospective clients were urged to take out cash advances to place into the defendants’ foreign exchange accounts. In this manner, NGI, Naranjo, and Gonzalez solicited upwards of $3.6 million from at least 165 individuals.

A little less than $300,000 of the total investment was sent to be traded in forex with a company based in Panama. The rest was misappropriated by Naranjo and Gonzalez, some for personal expenses and some to make Ponzi payments to other participants. Naranjo used money for airline tickets, house payments, and a Mercedes-Benz, among other things. Between October 2008 and May 2009, some foreign exchange customers received payments that theoretically represented their 10% profits. In reality, these were Ponzi payments from funds misappropriated from new participants. In total, $1.7 million was paid out to customers. When funds ran out, foreign exchange customers received checks that bounced when cashed.

In addition to the penalties levied on him in the CFTC case, Gonzalez has been sentenced to 11 years in prison and ordered to pay $2.2 million in restitution for criminal fraud charges relating to the NGI Ponzi scheme. Naranjo, a Mexican national, is believed to have fled the United States.

Read more about this CFTC foreign exchange enforcement action.
Creative Commons License photo credit: jurvetson

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