Mason-Area Man Pleads Guilty to Money Laundering Related to Investment Fraud Scheme

GRAND RAPIDS—Ty Allan Klotz, 48, formerly of Mason, Michigan, pled guilty to money laundering related to his operation of an Internet-based commodities futures trading scheme, U.S. Attorney Donald A. Davis announced today. Mr. Davis was joined in the announcement by FBI Special Agent in Charge, Andrew G. Arena, and IRS Criminal Investigation Special Agent in Charge, Maurice M. Aouate.

Klotz admitted at his change of plea hearing before United States Magistrate Judge Ellen S. Carmody that in 2004 he began telling area residents that he was an expert in commodities trading and was earning substantial returns from his trading activities. Soon after, he established several businesses in Mason, including Aurifex Investment, Aurifex Research LLC, and Aurifex Commodities Research Company, and created the appearance that he was a licensed commodities broker. From April 2004 through March 2006, Klotz devised a scheme to defraud hundreds of investors by making misrepresentations, including that he was averaging a return of 20 percent per month, that investors’ funds would remain on deposit in an FDIC-insured financial institution, and that investors’ funds were additionally insured by Lloyd’s of London. Klotz admitted that he fueled his scheme to defraud by creating monthly statements of account, which he mailed to investors, showing large investment returns that were entirely false and that caused many investors to increase the amount of their investments with the Aurifex entities.

At the change of plea hearing, Klotz admitted that he did not invest most of the investors’ deposits but instead used them for his own personal expenditures, including the purchase of Rolex watches, luxury vehicles, expensive clothing and a personal residence. By Klotz’s own admission, he attracted more than two million dollars from investors and more than one million dollars has not been returned. Klotz faces up to 10 years’ imprisonment on the money laundering conviction, as well as up to a $250,000 fine and mandatory restitution to the victims. A sentencing hearing is scheduled for August 16, 2010 before U.S. District Judge Janet T. Neff.

U.S. Attorney Davis commended the special agents of the Federal Bureau of Investigation and IRS Criminal Investigation, along with the Mason Police Department and the Commodities Futures Trading Commission, for their hard work in this investigation. This case is being prosecuted by Assistant U.S. Attorney Ronald M. Stella.