The CFTC has won a default judgement against Barki, LLC, a North Carolina firm charged in connection with a foreign exchange (“forex”) Ponzi scheme last month. Barki and its agent, the late Bruce Kramer, were charged with fraudulent solicitation and misappropriation of $38 million.
Restitution and civil monetary penalties of about $40 million have been imposed on Barki and relief defendant Forest Glen Farm, LLC. Furthermore, relief defendants Rhonda Kramer has been ordered to disgorge all customer funds she received through Bruce Kramer’s fraudulent behavior.
According to the CFTC, between June 2004 and February 2009, Kramer told potential investors that he was a successful forex trader and an expert mathematician. He promised them the Barki trading system carried little risk and that they could expect monthly returns of at least 3-4%. He was able to solicit at least $38 million from about 79 customers in this manner.
Of those millions, approximately $17.5 million were actually used to trade forex. However, the funds sustained devastating losses totaling $10 million. Kramer also misappropriated millions for personal use, buying among other things a 48-acre horse farm, a 6,000 square foot mansion, art, luxury cars, and hosting lavish parties.
In order to perpetuate the scheme, he issued false account statements to customers, and used the remaining funds to pay the profits (and sometimes return principal) his customers expected. The fraud was only ever uncovered after his death in February 2009.