The CFTC has filed a complaint against GID Group, Inc, and its agents and officers Rodney and Roger Wagner. The Texas-based defendants have been charged with operating an over-the-counter foreign exchange (“forex”) Ponzi scheme. A U.S. District Court Judge has entered an order freezing the defendants’ assets and prohibiting the destruction of their books and records.
According to the CFTC, from February to November 2010, GID and the Wagner brothers solicited customers to participate in pooled investments in off-exchange forex on a leveraged or margined basis. The defendants showed prospective clients detailed payout scheduled that promised returns of two hundred percent or more. In face-to-face meetings, the Wagner brothers claimed that they had two to three years of forex trading experience, and were consistently earning four percent a day. In this manner, the defendants were able to obtain over $5.5 million from at least 99 individuals.
The complaint alleges that only a fraction of the total funds solicited were ever deposited into forex trading accounts by the defendants. These accounts, held in the name of the Wagner brothers, sustained net losses during the relevant period. However, in order to perpetrate their fraud, the defendants allegedly showed customers payout schedules, and made weekly Ponzi payments disguised as “returns.” What were supposedly profits generating in training were actually funds deposited by other clients.
The CFTC is seeking a return of restitution, repayment of ill-gotten gains, trading and registration bans, and civil monetary penalties.