FlashBack: Lawsuits, Injunctions and Forex to Ponzi?

Today we start a series we call Flashback: ‘Last Year this time’. We will run this weekly series until the end of August.

Week ending May 30, 2008.

The week started with us looking at the Cash Plus boss facing the probability of going back to jail after being released on bail, if he failed to declare his assets. By this time, lawsuits against Cash Plus were also propping up. Questions whether they were worth it also surfaced given that effectively the lawsuits would be against the courts since Cash Plus was under the control of a court appointed receiver. Seeking to have the UFO liquidated and charges filed for fraud seems the best option.

Interestingly, one of those lawsuits was being served on behalf of David P. Rowe, a man who had publicly defended Cash Plus and chiding those who sought to clamp down on the Ponzi

OLINT new members agreement
On the Olint front, investors were being told they had to sign a new agreement by May 31, 2008. The agreement was suppose to pave the way for payments to begin in late June 2008.

The link between Lewfam,TCI FX showed it face on the Internet as a visit to TCIFX.com carried you to the Lewfamclub.com website. That slip was correct soon.

We highlighted a story with frigtening similarities to OLINT. A Forex club run by John Ward that allegedly started as a FOREX club but turned out to be nothing more that a PONZI.

Our highlighting of the following statement from a prospectus also created a stir.

TCI FX
The Fund TCI FX TRADERS LTD (“the Fund” or “the Company”) is an open ended investment company incorporated in the Turks and Caicos Islands on August 16th 2006 and subject to the laws of the TCI. It is established for the purpose of investing through OLINT TCI which is a FX Trading entity, with the object of obtaining constant above average absolute return through a disciplined investment approach.

Somehow the reported rates for the clubs (Olint TCI and TCI FX) were interestingly different. This revelation to some cause a stir.

Acount Closure Battles
Another UFO, Worldwise was also in the news battling RBTT’s decision to close their accounts. while Olint was also waiting on the court to hand down a decision in its case against NCB also related to the closing of accounts.

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:

Striking Similarities of UFOs X,Y,Z

Today we invite people to look at the similarites between three clubs. Let’s call them X, Y, Z. For each question, if the statement is correct for at least 2 UFOs, answer true or false. When you are done tally the answers. (You will need a peice of paper)

  1. Offered High Yield returns fixed and averaged close to or above 10% per month i.e. 120% annually (simple interest) or 210% annually (compounded)
  2. Operated without being registered with the FSC
  3. Remained Un-regulated and fought regulation. (n.b. X is allegedly registered in TCI but not in Jamaica)
  4. No Audited Financial Statements available.
  5. Little or no transparency
  6. Blamed one or all of the following, the Banks, FSC, Brokers, Due Diligence (oh now some parts of the Media e.g Cliff Hughes and Nationwide.)
  7. Poor accounting Records (X admitted it, Y receiver stated it and Z ex-Manager said it)
  8. Sponsored Big Events( possibly to buy social capital), Premier League(Y), Jazz and Blues Festival(X) and Ms. Universe(Z)
  9. Have failed to pay most of their clients for months (n.b. Y in receivership/liquidation)
  10. Big supporters/Defenders in the Media e.g. Law Professor David P. Rowe, who later sued them, and Mark Wignall, who up to the end of last week could not find any of his usual ‘sources’ to talk to.

If you have over 7 answers of ‘true’ you have a problem. You should be able to name the clubs. Do you know of any other similarities?

Related:

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:

F1 Closes OLINT-traded Gold Fund

F1 Investments is explaining to customers that problems with David Smith Led OLINT has put their GOLD fund in jeopardy.  In a release to members they say that the Platinum fund is not in danger except for the problems that they are having with Ingrid Loiten led May Daisy. Please see the letter below.

July 25, 2008

Dear Valued Client

We would like to take this opportunity to thank you for your patience and understanding and seek to update you on the current status of affairs with regards to our Gold and Platinum Funds in light of recent developments which have occurred within the foreign exchange trading industry.

As you are aware our Gold Fund, as mentioned on the website, is traded by OLINT Corp. Limited (OLINT).

Mr. Smith sent out a communiqué on July14 & 18, 2008 and we wish to forward this to you, as this will have implications re your Gold Funds in trade.

We believe that due to investigations by various international authorities there may be a significant impact on OLINT’s ability to successfully trade this Fund and as such in order to protect the funds placed with OLINT we have decided to close this Fund and have requested that OLINT forward to us all monies due to date with a view to paying out our clients all amounts due for this Fund. It is our understanding that to date no legal action has been brought by the authorities against David Smith or OLINT nor has OLINT been ordered to cease its operation.

We have heard that the investigation, at this stage, is a fact-finding exercise on the part of the local authorities in the exploration of their mandate to stem the flow of financial crimes in the jurisdiction, however we believe that our decision to close the Gold Fund is necessary to mitigate any risk to client funds in light of these circumstances.

We are aware that possible consequences of this investigation could be the delay of these payments by OLINT and we are currently in dialogue with OLINT with a view to have payment made as soon as possible. A direct consequence will be the delays in fulfilling encashment requests for the Gold Fund.

We anticipate a resolution to this situation and will endeavour to keep you fully informed and pledge to address all relevant issues in a timely, effective and efficient manner as the situation unfolds; as we can only inform you of the facts as we receive them. As you are aware, this is beyond our control.

Our Platinum Fund continues to be traded by our traders with good results save and except for the sums placed with Ingrid Loiten of Maydaisy which we are endeavouring to recover through due process in the Courts of the United States of America.

We continue to monitor the events closely and commit to keeping you informed. We once again thank you for your understanding and wish to reassure you that your support
serves to encourage and strengthen our resolve to do whatever is necessary to ensure that our clients’ interests remain of paramount importance.

Please do not hesitate to give us a call for any queries you may have.

Yours sincerely,
F1 INVESTMENT INC.

May Daisy and I Trade

Although much sadness and excitement has surrounded Olint and David Smith,  there is still the matter of what is happening with May Daisy. Ingrid Loiten figured prominently in that NFA report but for the most part it has gone unnoticed. Ingrid Loiten again figured in the Depart of Justice’s letter to FXCM. May Daisy has also been suited by F1 Investments and interestingly I-Trade FX is named as a defendant in the lawsuit.

Ingrid Loiten (May Daisy) named

Item 25

Another account at l-Trade which had suspicious activity was the account of Ingrid Loiten (”Loiten”), which was opened in August 2006. Loiten’s account opening documents listed her annual income and net worth as between $25.000 and $50,000. Yet, between December 2006 and March 2007 , seventeen deposits weremade to Loiten’s account totaling over $1.7 million.

Item 26

l-Trade’s records included an April 17,2007 e-mail from Jared Martinez to Martinez concerning a purported April 13 meeting with Loiten, during which she supposedly told Jared Martinez that she owned and operated a multi-million dollar website, http://www.homeworkjamaica.com, and wished to deposit between $2 and $5 million of her personal funds into her trading account. Despite the discrepancy between Loiten’s account application and her purported verbal representation to Jared Martinez in April concerning her financial information, l-Trade waited almost two months to obtain updated information from Loiten, even though it accepted an additional $2.7 million in deposits during that same time.

Not only was the size and frequency of the deposits in Loiten’s account inconsistent with her stated annual income and net worth in her account application, but the wire activity in her account was also highly unusual. For example, Loiten opened her account in August 2006 with a $500 deposit and, over the succeeding three months, made four subsequent wire deposits averaging less than $2,000. However, beginning at the end of December 2006, the wire deposits changed dramatically in size and frequency. During the first three months of 2007, Loiten made multiple wire deposits (e.g., five to six per month) in amounts averaging over $100,000 each.

Item 35

l-Trade and Martinez failed to file SARs for, or otherwise report, the highly suspicious activities, as alleged above, which occurred in the Olint and TCI accounts and the Harris account – and also failed to file a timely SAR for, or otherwise report, the suspicious activity which occurred in the Loiten account, and, thereby, completely disregarded their obligations under NFA Compliance Rule 2-9(c), the Notice, and the firm’s own AML procedures.

l-Trade did file a SAR for the Loiten account but only after it received information in March 2008 that Zambian authorities had anested Loiten for alleged money laundering. However, l-Trade never filed a SAR for the suspicious activity that took place in Loiten’s account between December 2006 and June 2007.

Here is the troubling part Item 36

l-Trade filed a SAR for a customer who deposited $10,000 in an account and withdrew the funds several months later without ever trading. Similarly, l-Trade filed SARs for two other customers who each deposited $5,000 and then withdrew the funds a month or two later without conducting any trading. The activity reported in these SARs was far less suspicious than the suspicious activity which went unreported in the Olint, TCl, Hanis and Loiten accounts

May Daisy has not paid most investors for many months. They closed all Jamaican accounts at the end of May but in the most part they have failed to repay investors even their principal much less their ‘interest’ or ‘gains’.

I-Trade FX covers its tracks?

I-Trade FX has some explaining to do based on these statements (changing the order for emphasis) ,”However, l-Trade never filed a SAR for the suspicious activity that took place in Loiten’s account between December 2006 and June 2007.” and “l-Trade did file a SAR for the Loiten account but only after it received information in March 2008 that Zambian authorities had anested Loiten for alleged money laundering” 

I-Trade must file a written answer to the complaint with NFA within thirty (30) , days of the date of the Complaint, i.e. by July 31, 2008.

You can and should read the entire document here. http://www.nfa.futures.org/basicnet/CaseDocument.aspx?seqnum=1620

N.B.  Thanks to poster who pointing out this document.

Related: