Jury Convicts Man of Mail Fraud, Wire Fraud, and Filing False Tax Returns in His Operation of a Foreign Currency Trading Fund

United States Attorney Karen P. Hewitt announced that today a federal jury returned verdicts of guilty against Mark Todd Hauze on eight counts of mail fraud and six counts of wire fraud and one count of filing a false tax return, all arising from Hauze’s operation of a foreign currency trading fund named “Universal Money Traders” (UMT), located in Solana Beach, California. The verdicts follow a two-week trial before United States District Judge Thomas J. Whelan.

According to the evidence presented at trial, from 2002 to 2005, Hauze used sales agents, a website, and other means to fraudulently solicit more than $10 million from members of the public, supposedly for participation in foreign currency trades. The evidence showed that Hauze induced people to invest their retirement accounts and other funds in UMT by falsely representing, among other things, that UMT’s foreign currency trading had generated annual returns of 30 percent or more, that UMT used a guaranteed “stop-loss” system that limited a client’s potential losses to 15 percent of each $2,000 trading position, and that clients could receive accurate information about their account balances and trading results through readily-accessible online account statements.

The evidence established that Hauze intentionally concealed from UMT’s clients that, in reality, UMT did not use a guaranteed stop-loss, and that UMT regularly reported bogus trading results and false account balances to the clients. The false trading reports caused UMT clients to believe that their account balances were growing, when, in fact, Hauze had substantially dissipated the clients’ funds through trading losses, commission charges, and other means. The evidence further showed that Hauze converted a substantial portion of the clients’ funds to his own personal use, and that he used new money received from UMT clients to fulfill withdrawal requests made by other clients. According to the indictment, around March 2005, when UMT failed to honor withdrawal requests made by UMT clients, Hauze falsely represented that UMT could not timely process the requests because the client accounts were temporarily frozen for an audit. The evidence also established that, on his 2004 Federal Income Tax Return, Hauze failed to report hundreds of thousands of dollars in income that he received from his operation of UMT.

United States Attorney Hewitt said, “Our office will continue to pursue financial fraud in our district, no matter what form it takes.”

Federal Bureau of Investigation Special Agent in Charge Keith Slotter commented, “The FBI is committed to investigating individuals that engage in these fraudulent investment practices. This guilty verdict serves to reinforce integrity in the system.”

“High yield investment fraud schemes are crafted to create illusions of attainable wealth in a short period of time. Today’s guilty verdict is a concrete example of how easily it is for investors to fall for a 'get rich quick' scam and lose their life savings,” said Catherine D. Tucker, IRS Acting Special Agent in Charge of the Los Angeles Field Office. “IRS Criminal Investigation is committed to identifying and investigating those who take advantage and impact the financial well being of others for their own personal financial benefit.”

Judge Whelan set a sentencing hearing on April 19, 2010 at 9:00 a.m.

Mark Todd Hauze

SUMMARY OF CONVICTION

Eight Counts: Title 18, United States Code, Section 1341 - Mail Fraud Maximum penalties (per count): 20 years in prison and a fine equal to twice the gross loss caused to persons by the offense.

Six Counts: Title 18, United States Code, Section 1343 - Wire Fraud Maximum penalties (per count): 20 years in prison and a fine equal to twice the gross loss caused to persons by the offense.

One Count: Title 26, United States Code, Section 7206(1) - Filing False Tax Return Maximum penalties: three years’ imprisonment; $100,000 fine, each count.

PARTICIPATING AGENCIES

Federal Bureau of Investigation
Internal Revenue Service - Criminal Investigation