US SEC busted two Ponzi schemes which defrauded over 100 investors
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
The forex market has seen its fair share of trouble lately, from legitimate companies that were charged with data mismanagement to fraudulent firms that were running forex-based Ponzi schemes. In fact, US SEC just busted two of the latter firms, Avail Progression and Elite Generators, both run by 26-year-old John Fernandez.
According to the regulator, the companies are unregistered, and they were both running fraudulent forex trading schemes. The official charges were filed last Friday, and they say that Fernandez used his two firms to raise more than $4.3 million. After that, he proceeded to defraud over 100 investors.
Textbook Ponzi schemes
Fernandez himself is a resident of Texas, and according to the regulator, he does not have a professional trading background. Even so, he managed to trick investors by claiming that he was a trading expert who had a proven track record. He guaranteed returns up to 100%, thanks to his alleged trading strategies for FX markets.
Like most similar schemes, he was promising high returns with little to no risk, which most experienced investors recognize as a red flag. However, there are always less experienced newcomers to the trading industry who tend to believe even those offers that sound too good to be true.
Fernandez provided investors with some basic offering documents that promised high returns, as well as dates when the returns could be expected. As soon as investors provided the money, however, he did not use it for investing, but rather, he made Ponzi payments and misappropriated the money to fund his own lifestyle.
His victims said that he made various excuses whenever someone tried to approach him for being late with the returns.
SEC has already filed the charges
Avail Progression was the first company that Fernandez launched. After setting it up, he ran a Ponzi scheme until he ran out of money. After that, he transitioned to his second company, Elite Generators, essentially just repeating the process and defrauding as many investors as he could find.
After coming to the regulator’s attention, Fernandez and both of his companies were charged for violating the US securities act’s securities registration and antifraud provisions. Furthermore, the SEC is now seeking permanent injunctions of the accused. Finally, the regulator also followed with civil penalties, as well as disgorgement of stolen funds with prejudgement interest — against each defendant.
As for the chargers, they seek to ban Fernandez from ever holding any position in a public company, including any officer or director seat.
With the demand in the trading sector skyrocketing, the investment scams — which were always present — surged in number as well. Just recently, the SEC went after eight finance influencers who used social media to trick users into investing in specific assets, only for the influencers to dump the assets after the money was invested. The regulator said that it was a $100 million pump-and-dump scheme.
The scams and schemes have also been growing in the crypto industry, with the SEC just recently taking action against crypto-related Ponzi schemes.
