Utah Man Arrested And Charged In Manhattan Federal Court With Commodities Fraud

Preet Bharara, the United States Attorney for the Southern District of New York, and Diego Rodriguez, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that SCOTT A. BEATTY was arrested this morning on commodities fraud and wire fraud charges stemming from his scheme to defraud more than 49 investors of more than $825,000 through a fraud scheme in which BEATTY solicited investments for off-exchange foreign currency contracts known as “forex.”  BEATTY was arrested this morning in Roy, Utah, and will be presented at 4:30 EST today in federal court in Salt Lake City, Utah.

U.S. Attorney Preet Bharara said:  “As alleged, Scott Beatty perpetrated one of the oldest financial crimes in the book – lying to investors about his plans for their money and instead, spending it on himself and to pay other investors.  Through alleged misleading representations on his website, Beatty lured close to 50 investors interested in foreign exchange trading and defrauded them out of close to a million dollars.  I thank the FBI and Commodity Futures Trading Commission for their work in this case.”

FBI Assistant Director-in-Charge Diego Rodriguez said:  “When investors look for help finding wise and lucrative investments, they put trust in experts who should have their best interests in mind.  Beatty allegedly abused that trust and spent his clients’ money on himself.  Investors should have a healthy skepticism when investing in high yield investments, and ask questions about how their money is being invested.  If the answers don't add up, call the FBI.”

According to the Complaint unsealed today in Manhattan federal court[1]:

From January 2011 through June 2014, BEATTY, through his investment companies Peak Capital Management Group, Inc., and Peak Capital Group, Inc., engaged in a fraudulent scheme to obtain investments from individual investors purportedly for the purpose of trading in forex.  In connection with the scheme, BEATTY made a series of false and misleading representations to investors, on the website www.peakforex.com (the “Website”) and through email, including: (a) that BEATTY was using investors’ funds to conduct forex trading when in, in fact, BEATTY used just $125,000 of the $825,000 in investor funds for trading; (b); that BEATTY’s forex trading was generating consistently positive annualized returns as high as 43.9 percent when, in fact, his limited trading was consistently unsuccessful; and (c) that BEATTY had created individual accounts for each investor on whose behalf BEATTY purported to execute forex trading, when in fact, BEATTY failed to create such individualized accounts.  In addition to false and misleading representations made on the Website and over email, BEATTY generated wholly fictitious account statements that he provided to his clients through a client portal on the Website.

As a result of these misrepresentations, BEATTY obtained more than $825,000 in investments from more than 49 investors, the majority of whom were Japanese citizens who, under the Commodity Exchange Act, were not authorized to trade leveraged, margined, or financed forex in individually managed accounts.  BEATTY routinely converted investor funds to his own use in the form of cash withdrawals and debit card purchases, including at least $517,000 for, among other things, BEATTY’s personal expenses such as restaurant bills and retail purchases.  In addition, to hide his trading losses and continue to fund his personal lifestyle, BEATTY used new investor funds to pay back other investors in a Ponzi-like fashion.  In total, BEATTY distributed approximately $184,000 back to investors. 

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BEATTY, 40, of Roy, Utah, is charged with one count of commodities fraud, which carries a maximum sentence of 10 years in prison and a maximum fine of $1 million, or twice the gross gain or loss from the offense; and one count of wire fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Bharara praised the work of the FBI and the Commodity Futures Trading Commission.  He added that the investigation is continuing.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit www.StopFraud.gov.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorney Andrea M. Griswold is in charge of the prosecution.  

The allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.