Olint Ponzi’s Boss David Smith gets 30 years

David Smith of OLINT fame today was sentenced to 30 years in prison. He was sentenced after being found guilty on 23 counts of wire fraud, conspiracy to commit money laundering and money laundering. David Smith was previously sentenced to six and half years in the Turks on Caicos in 2010. David Smith ran OLINT as a foreign exchange (FX) outfit that promised persons high returns that averaged 10% per month.   In reality OLINT  was a massive Ponzi that managed to rake in reportedly over US$220 million from over 6000 investors.

History

OLINT started sometime in 2004 as a quiet members club whose growth depended on word of mouth referrals. By 2006 however the Unregulated Financial Organisation as it was called began to face scrutiny in Jamaica from the Financial Services Commission (FSC), the financial services regulators in Jamaica.  Despite many public warnings by the FSC and leading bankers at the time money continued to flow into OLINT via intermediaries that would become know as feeder clubs and ‘pigs’.

In 2006, after a raid on OLINT and LewFam Investment, they shared adjoining office areas, by the FSC, the club then moved to Turks and Caicos where it operated. David Smith was also connected to TCI FX, a registered company in Turks and Caicos.  OLINT  was registered at different times in Panama and St. Kitts.   David Smith also formed a partnership with the principals of I-Trade  FX (now defunct), a foreign exchange platform owned by the operators of the Market Traders Institute(MTI). In late 2007 the formed a partnership called GotradeJamaica.com and also launched the OLINT foundation.

It has been reported that David Smith was hailed by the FX Chief as one of the greatest foreign exchange traders something that would later turn out to be false.  The National Futures Association investigation in 2009 of  I-Trade FX would show that David Smith/OLINT did little to no FX trading and when they did they lost. The same was fate of Ingrid Loiten of May Daisy apparent attempts at FX trading.

Influence

OLINT was acknowledged to have supported both political parties in Jamaica but the Jamaica Labour Party(JLP) is reported to have garnered significantly more support than the Peoples National Party(PNP). In fact some have argued that OLINT funds had a bearing on the outcome of the Jamaica elections in 2007.  Information available indicate that politicians from both sides of the divide in Jamaica, leading money market experts in Jamaica, doctors  lawyers and the likes are those that invested in OLINT.  One politician, Errol Ennis, a former minister of state in the Finance ministry, described the raid, on OLINT at the time, as a vulgar abuse of power by the state. Audley Shaw the current Finance minister was reported to have said in the Gleaner of January 31, 2007,  that FSC’s  actions against Olint, an entity which offers attractive interest rates, were unacceptable.

OLINT also sponsored the 2008 Jazz and Blue Festival, an annual music festival held in Montego Bay, Jamaica or its environs.

Former heads of the FSC, Byran Wynter, now the present governor of the Bank of Jamaica and George Roper the acting head 2007-2008, took much heat from the public for their strident opposition to the unregistered and unregulated financial operators  or alternative investment schemes as OLINT and others like Cash Plus, May Daisy and Worldwise etc became known as.

Impact on the Diaspora

OLINT word of month referral led to the investments coming from Jamaicans living in the USA, Canada, UK among other countries. The impact of the OLINT crash was particularly felt in Florida often referred to as Kingston 21.

In 2008, after the Ponzi ran into difficulties paying its customers and Money Laundering and other charges surfaced in July 2008, David Smith was arrested in Turks and Caicos  and the famous confession letter surfaced. He was later charged and convicted and subsequently brought for trial in the USA in 2010.

According to the Orlando Sentinel, Smith is to serve his sentence in the Turks and Caicos then the rest of time in the United States.

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May Daisy members still longing

May has gone, it is now the middle of June and no Daisies have bloom as yet. Since early June, a new update is now available from May Daisy to its memberships explaining the continued delay. The early June communication suggested that Cycle A was completed. However feedback from members has not suggested that this has been done.

Dear Members:

We apologize that we have not completed the updates to all the accounts. The updates have been delayed as we try to honour the many requests for status reviews. Update priority is given to the accounts in the earlier cycles. We have updated all of the cycle “A” accounts, therefore all persons in this cycle will now have seen this reflected on their account. This cycle has been closed. We have also closed off the list for the cycle “B” accounts and are in the process of updating these accounts.

We expect the payments to be on time and are working feverishly to ensure this happens. We thank you for your patience and wish you God’s richest blessings.

In past communications, May Daisy has promised that members would be placed in cycles and that persons would be paided based on the cycle they fell in. Based on the Cycle Plan, members in Cycle A should have been paid by June 13. However, it is not clear if any May Daisy member even knows which Cycle they belong to and NO payments have been made.

There has been rumours that May Daisy will be sending out statements quarterly not monthly. There is really no point to this as people continue not to be paid. There continued to be stories that once the members have been placed in cycles, which should have bee done already, ‘encashments’ or payments will be begin at the end of June.

In Blogosphere, a group of May Daisy Investors, have form a “May Daisy support Group” with an aim to tackle the Management of May Daisy, maybe a little too late, but it is better than sitting down idle and trusting those that have fail be keep promises.

There is still some answered questions, why was one of the Principals arrested in Zambia, was the arrest related to May Daisy funds, has the cases against the principal been dropped?

I-Trade Response now available.

The NFa has release I-trade FX’s response to NFA complaints.

At this time we are not able to comment, we will do so later but here are some highlights

Ingrid Loiten

Respondents state in the affirmative that over 94%o of the funds deposited by Loiten were lost tradings.

Gareth Harris

Respondents state in the affirmative that Harris sustained trading losses in his account in excess of 9.5 million dollars, which was equivalent to over 94% of the deposits made in the account.

On David Smith we will have to revisit the document.

Here is the link

F1 vs May Daisy (Part 2)

On June 26, 2008, Steve Plamer & F1 investments has filed a lawsuit in a Flordia court against Ingrid Loiten, May Daisy, I Trade FX, LLC, Deutsche Bank Trust Company Americas and Turks & Caicos Banking Co. Ltd.  In part 2 of this article we examine briefly the counts  as stated in the lawsuit.

These are the Counts as outlined in the lawsuit 

  1. Breach of contract
  2. Civil theft
  3. Conversion
  4. Unjust enrichment
  5. Demand Accounting 
We will now present a brief outline of each charge.

Count #1: Breach of Contract

Breach of contract is pretty much self explanatory.  F1 investments is accusing May Daisy and Ingrid Loiten of the following breaches.

  • Wrongful transferring money to 3rd party
  • Delegating duties
  • Failing to exercise diligent honesty
  • Failing to return funds when requested.

Count #2: Civil theft

In this count F1 Investment is basically saying May Daisy and or Ingrid Loiten has stolen their money. Civil Theft appears to be a american statue in some states including Florida. In summary it is a civil action brought by private individuals and is basically similar to obtaining money by false pretense, fraud and or deception.  It is a statutory right, and in Florida it is defined in §812.012, Florida Statutes.

Count #3: Conversion

This has to do with intentionally and wrongfully depriving another  person of his property permanently or for an indefinite time.  The intent component is important and F1 Investment is arguing that May Daisy/Ingrid Loiten has intentionally deprived it of its money.  The failure to return property(money) also is a part of conversion.

Count #4:  Unjust Enrichment 

In the this count F1 Investments is arguing that May Daisy has been duly enriched at the its expense and under obligation to make restitution.  F1 investment is asking May Daisy has unjustly gained it must return F1’s money

Count #5: Demand for accounting

It is in this count, that I-Trade FX and the other defendants come in. F1 Investment is asking the court to demand the accounting records of Ingrid Loiten and or MAY DAISY. That is, they are requesting that all the transaction records for accounts held with these defendants, including I-Trade FX be produced.

I am not a lawyer so the information presented is my understanding based on information available. Please consult a lawyer for legal advice.

Sources:

F1 vs May Daisy (Part 1)

In an interesting twist one alternate investment scheme(AIS) or Un-regulated Financial Organisation(UFO) has sued another. This occurred when F1 investments had enough of May Daisy’s failure to pay over sums it had requested. Here are more details on that lawsuit. There are five(5) points of contention

  1. Breach of contract
  2. Civil theft
  3. Conversion
  4. Unjust enrichment
  5. Demand Accounting

Background
Based on the information at hand, F1 investments contracted May Daisy to trade Foreign Exchange with specific contractual conditions. The account with May Daisy operated from August/September – December 31, 2007. A request for full encashment was made on January 13, 2008. That request has yet to be honoured. This effectively forms the basis of the lawsuit.

Time-line
The time-lime will further explain what appears to have happened.

  • August 16, 2007 – US $2,500,000 given to May Daisy
  • September 6, 2007 – Contract finalised
  • Sometime after September 6, 2007 – A further US $9,330,278 handed over to May Daisy
  • By December 31, 2007 – F1 account with May Daisy valued at US $20,191,858.16
  • January 13, 2008 – Request made for funds, i.e full encashment, no funds forthcoming
  • April 2008 – Ingrid Loiten arrested in Zambia and US $7,000,000 seized.
  • June 13, 2008 – Court documents signed
  • June 26, 2008 – Documents filed in Florida court.
  • July 25, 2008 – Letter sent out to clients
Special Terms
The contract between F1 investments and May Daisy appeared to have some specific terms. The following are highlighted as they are mentioned specifically in the lawsuit.
  • Only May Daisy and Ingrid Loiten should trade the F1 investment funds.
  • Trading should not be sub contracted.
Allegations
  1. May Daisy and Ingrid Loiten allegedly used I-Trade FX which was a breach of contract
  2. May Daisy allegedly sub-contracted actually trading to I-Trade FX which was also a breach of contract.
On June 26, 2008, Steve Plamer & F1 investments has filed a lawsuit in a Flordia court against Ingrid Loiten, May Daisy, I Trade FX, LLC, Deutsche Bank Trust Company Americas and Turks & Caicos Banking Co. Ltd.  In Part 2 we will attempt to break down the counts in the lawsuit and explain how I-Trade FX and the other defendants come in. 
Related:

I-Trade and Martinez Response Delayed

The NFA is reporting that I- Trade FX and Isaac Martinez’s response, to the June 30, 2008 complaint, should be available on August 15, 2008. According to the NFA information desk, an extension was given and as soon as the response is available it will be posted on their web-site. They further stated that there was nothing to be read into the delay as it is a usual occurrence.

Serious Penalties if found guilty
According to the complaint document, at the conclusion of the proceedings, the NFA may impose one or more of the following penalties:

  1. expulsion or suspension for a specified period from NFA membership;
  2. bar or suspension for a specified period from association with an NFA Member;
  3. censure or reprimand;
  4. a monetary fine not to exceed $250,000 for each violation found; and
  5. order to cease and desist or any other fitting penalty or remedial action not inconsistent with these penalties.

History
On June 30,2008, the NFA filed a complaint against I-Trade FX after investigations found that I-trade FX failed to file Suspicuous activity Report(SARs) on some transcactions carried out by OLINT, TCI FX, David Smith, Ingrid Loiten of May Daisy and Gareth Harris.

I-Trade FX response to the complaint is of interest to many persons especillya OLINT and May Daisy investors. What I-Trade says might not have a bearing on how quickly persons get back their money but it might just give further highlights into what happened to the money.

The Department of Justice in the United States in a letter dated July 11,2008, later froze all the assets of the said persons/organisations named above in that NFA complaint against I-trade FX. Whether this was conincidence or related no one is sure but reasonable conclusions could be drawn.

MTI on the Defensive?
On Sunday July 27, 2008, Market Trader’s Insitute(MTI) a sister organisation of I-Trade FX, published an AD. That AD it could be said stopped just short of calling David Smith’s OLINT and Ingrid Loiten’s May Dasiy and other Forex Clubs scams and guilty of taken advantage of Jamaican people.

Related:

The value of regulation and Disclosure Part 3

I have been following this particular company (Forex Liquidity LLC) for the last two – three months and has presented two reports thus far on the company.

The more I read today about Olint and all its affiliates, the more I am thinking that Forex Liquidity script was used by Olint in its operations, as there are some very actions taken by both companies that seems to be very similar.

I now present the latest report as presented by the reciever who was brought in to wind up the operations of the firm and try to get back funds from those that profited in this company.

As I have said in the first two articles, this company was registered with both the NFA and the CFTC, and it was the later who brought charges against the company and hence shutdown their operations before they could fleece more innocent people.

Supporters of Olint and the other AIS, seems to believe that there is some grandiose scheme on the part of the local regulatory body, the FSC to prevent real AIS from giving birth, while failing to realize that the intent is really to prevent these folks(AIS principals) from robbing their clients (the investors).

This report is the second report made by the receiver to the courts as it relates to the progress of his findings into the operations of the Forex Trading company.

Its a very long report but makes for good reading .


http://www.robbevans.com/pdf/forexlqreport02.pdf

PS . Just as I finished my piece I have received word that the receiver has completed his work on the company and has made some rather interesting proposals to the courts which have been approved.

I will present those in my final report on this company along with some commentary.

For those who have the time and would like to proceed you can find a copy of that particular document which was approved yesterday.( Yes we up to the time with the news 🙂 )

http://www.robbevans.com/pdf/forexlqnotice08.pdf