The CFTC has filed charges against Mark Rice and his company, Financial Robotics (FinRob), for over-the-counter foreign exchange (“forex”) solicitation fraud and misrepresentation. A federal judge in Texas has frozen the defendants’ assets, prohibited the destruction of books and records, and ordered Rice and FinRob to appear before a court at the end of the month.
In September 2006, the Texas resident and his company allegedly solicited millions from Robert Copeland. Rice told Copeland that he had developed an automated forex trading program, or an expert advisor (EA), that was generating incredible profits (10-15% return per month). According to the complaint, the defendants guaranteed that the investment was “risk free”—not only was the trading method sound, but any initial investment would be insured against loss.
Altogether, the CFTC says Copeland invested in excess of $10 million over several years with Rice and FinRob. These investments were spaced out over a period of time. After losing money in an FCM account, Rice allegedly advised Copeland to move his investment to the UK, to a forex account held in FinRob’s name. Though the account lost nearly two million between 2007 and 2008, Rice told Copeland that his investment was growing steadily, and that his account would soon be worth $20 million.
According to the complaint, in November 2008, Rice informed Copeland that his entire investment has been lost. A few months later, he informed Copeland that it had never been insured against loss. Thus far, only a few million of the $10 million investment has been repaid.
In a bizarre twist of fate, the funds Copeland invested were not his own. In 2009, Copeland plead guilty to wire fraud. The money he invested with Rice he himself had fraudulently solicited from 125 investors purportedly to use for real estate and other development purposes, not for forex trading.
The CFTC is seeking restitution, disgorgement of ill-gotten gains, and civil monetary penalty.