A FOREX Club to a Ponzi?

The club had been operating since 2002 and the returns were good. The company operated in more than one country. In one country, the investors were primarily from the local community and like most investment clubs did not need to advertise as the good news of the high returns was spread by word of month. In another country the company used limited promotional materials.

Within the last three years, the club ran into some problems. The club alleges that it suffered massive losses and instead of passing on these losses to the investors, opted to use new investors’ money to pay old investors while attempting to correct the problem. 

While that might have been the real story, it appears that at least since 2005, the club as been operating as a PONZI. The club claimed that the payments were from gains in FOREX trading when it was not. Now the forward march of the club has been halted.

Source: http://www.sec.gov/divisions/enforce/claims/fomacinternational.htm

• See FOREX CLUB to PONZI (Part 2)