Owner of Investment Firm Charged with Securities Fraud for Orchestrating $4.7 Million Ponzi Scheme
|U.S. Attorney’s Office April 30, 2013|
CHARLOTTE, NC—The owner of a North Carolina investment firm has been charged with securities fraud for orchestrating a Ponzi scheme that solicited victims to invest millions in the foreign currency market (FOREX), announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
North Carolina Secretary of State Elaine F. Marshall and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, joined U.S. Attorney Tompkins in making today’s announcement.
On April 18, 2013, a federal criminal indictment charged James H. Mason, 66, of Graham, North Carolina, with one count of securities fraud in connection with a $4.7 million foreign currency Ponzi scheme. According to allegations contained in the indictment, beginning in 2010 and continuing through March 28, 2013, Mason executed the Ponzi scheme by inducing victims to invest with his investment companies, JHM Forex Only Pool and Forex Trading at Home Association, and other related entities, for the supposed purpose of investing in over-the-counter (OTC) foreign currency exchange.
The indictment alleges that Mason engaged in a scheme and artifice to defraud victims by making a series of false and fraudulent representations, omissions of material facts, and deceptive half-truths. Specifically, Mason falsely claimed to victims that he had over 35 years of experience in commodity futures and options trading, when in fact, Mason had no such experience at all, according to the indictment. Also, Mason lulled his victims into a false sense of security by falsely projecting substantial returns of their investments. Mason solicited at least 500 victims to invest over $4.7 million. According to allegations in the indictment, rather than investing it as promised, Mason simply deposited victim money into various bank accounts he controlled and used a substantial amount of investor money to pay for personal and business expenses, real estate, cars, and other expenses unrelated to any foreign exchange. In addition, the indictment alleges that Mason diverted most of the rest of his victims’ money to make “Ponzi” payments to other victims.
The criminal indictment also alleges that, throughout the course of this scheme, Mason put only a portion of investor money into foreign currency exchange. According to allegations contained in the indictment, Mason lost essentially all the money he did invest while conducting FOREX trading, thus losing even the minority of funds that he did trade. Mason failed to disclose his actual trading results to his victims and instead made false oral representations and provided bogus statements to clients, fraudulently reporting profits. The indictment alleges that in order to induce individuals to further invest in his fraudulent foreign currency commodity pool, Mason established a website so that investors could access their accounts online. These online investor accounts depicted that investors were making money through successful FOREX trading and had, in many cases, significant amounts of money in their accounts. As alleged in the indictment, profits stated on individual investor accounts were false and, in many cases, there was no actual money in the victims’ accounts.
Mason has been in local federal custody since April 15, 2013. He has been charged with one count of securities fraud, which carries a maximum prison term of 20 and a $5 million fine, plus restitution to investor victims of the scheme.
The charges contained in the indictment are allegations. The defendant is presumed innocent unless and until he is proven guilty beyond a reasonable doubt in a court of law.
The case was investigated by the North Carolina Secretary of State-Securities Division with assistance from the FBI’s Charlotte Division. U.S. Attorney Tompkins also acknowledges the invaluable assistance of the Commodities Futures Trading Commission in this case.
The prosecution is being handled by Special Assistant United States Attorney Kevin M. Harrington and Assistant U.S. Attorney Kurt W. Meyers of the Western District of North Carolina.
Mr. Harrington is an Enforcement Attorney with the North Carolina Department of Secretary of State-Securities Division and was appointed to serve as a Special Assistant United States Attorney (SAUSA) with the U.S. Attorney’s Office in Charlotte in September 2011. The SAUSA position is reflection of the partnership between the North Carolina Securities Division and the United States Attorney that helps ensure the effective and vigorous prosecution of white collar criminals, particularly in the area of securities fraud.
The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov.