Millennium Capital Exchange CEO Arrested for Running Foreign Exchange Market Ponzi Scheme
ATLANTA—Stafford S. Maxwell, the former owner of Millennium Capital Exchange, Inc., has been arraigned on charges of orchestrating a multi-million-dollar foreign exchange market Ponzi scheme. He was indicted March 17, 2015.
“Maxwell allegedly lured investors to his forex firm with false promises of trading success,” said Acting U.S. Attorney John Horn. “Even with an improving economy, investment fraud schemes are as popular as ever, and citizens need to be careful when choosing where to entrust their hard earned money.”
J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated: “The investigation that led to the indictment and arrest of Maxwell reflects the FBI’s commitment to the many victims that have suffered significant financial losses and hardships as a result of this fraudulent investment scheme as alleged in the indictment. Investors are reminded to be cautious of investment pitches that promise exceptionally high rates of return such as those allegedly promised in this case.”
According to Acting United States Attorney Horn, the charges, and other information presented in court: In March 2007, Maxwell incorporated and owned Millennium Capital Exchange, Inc. (“Millennium”), which purported to be a foreign exchange market trading firm. The foreign exchange market (or forex market) is the global market in which participants buy, sell, exchange, and speculate on currencies. The forex trading market consists of banks, commercial companies, central banks, investment management firms, hedge funds, retail forex brokers, and individual investors. Forex trading involves the trading of currencies from different countries against each other. An example of a forex trade is to buy Japanese yen while simultaneously selling United States dollars. Trading in foreign exchange markets frequently exceeds $5 trillion per day.
From about 2008 to January 2012, Maxwell solicited investments from individuals across the United States with promises of high fixed rates of return to be generated from successful foreign currency trading. In particular, to obtain money from investors, Maxwell falsely stated that: (a) he possessed excellent forex trading skills; (b) he had a long history of forex trading success; (c) he often assured investors that they would earn an annualized rate of return on their investments from approximately 48% to 72%; (d) he used “stops” and “floors” on currency trades to insure that the gains would be large, but that the losses would be small; (e) investors had realized significant gains based on his trading; and (f) he had reserve funds that enabled him to cover any trading losses.
According to the indictment, Maxwell: (a) had little success executing forex trades; (b) lost almost all the money that he traded in forex markets; (c) was unable to pay investors the promised investment dividends; and (d) possessed no reserve fund to cover forex trading losses.
According to Millennium’s business model, Maxwell was supposed to use the invested funds to make forex trades through accounts at a financial firm in Geneva, Switzerland. Based on his false representations, investors wired Maxwell well over $1 million, expecting that the funds would be traded in the Swiss accounts the indictment alleges. After receiving money from investors, however, Maxwell diverted approximately half of the money for other improper purposes. First, in an effort to perpetuate the scheme and make it appear that he was a successful forex trader, Maxwell used the money received from new investors (that was supposed to be traded on the forex market) to pay “dividends” to older investors. Second, Maxwell used the money received from investors (that was supposed to be traded on the forex market) to pay his own personal living expenses. In the end, Maxwell spent or lost almost every dollar invested with him.
Stafford S. Maxwell, 46, of Mableton, Georgia, was indicted on March 17, 2015, on ten counts of wire fraud.
Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by the Federal Bureau of Investigation.
Assistant United States Attorney Jeffrey W. Davis is prosecuting the case.