A U.S. citizen that operated a foreign currency trading Ponzi scheme that bilked victims out of nearly $18 million was sentenced to serve more than fourteen years in federal prison. Jeffrey Lowance, 51, was sentenced by United States District Judge Charles Norgle to serve 140 months in federal prison after previously being indicted on five counts of mail fraud, one count of wire fraud, and four counts of money laundering. Lowrance was arrested in Peru last year, where he had reportedly fled after authorities began investigating his currency-trading operation
Beginning in at least 2004, Lowrance owned and operated Mentor Investment Group ("MIG") in San Diego, California. MIG represented itself as a firm skilled in foreign-currency trading, soliciting potential investors with the promise that they could expect monthly returns ranging from 4% to 7%. After the State of California issued a cease-and-desist order against MIG in 2006, Lowrance moved to Panama City, Panama, and arranged for MIG to be acquired by First Capital Savings & Loan, Ltd. ("First Capital"), a New Zealand-based company also controlled by Lowrance. Through First Capital, Lowrance continued to solicit investors, and raised more than $30 million from investors until the scheme's collapse in 2009.
As early as April 2008, undercover federal agents posed as potential investors and were told by Lowrance that his company was managing $37 million from over 400 investors. However, according to authorities, First Capital was bankrupt by September 2008, and investors stopped receiving scheduled payments in July 2008. In 2009, Lowrance fled from Panama City to Peru. There, he is alleged to have continued his scheme operating a new entity, Private Global Banks, under the alias of Alan Carpenter.
According to an update sent to investors in February 2009, Lowrance confessed that all of the investors' funds were gone due to his mismanagement. Lowrance was not the skilled forex trader he had represented himself to be, but instead had tried numerous methods to find a trading program that worked, including hiring two Peruvians from a trading class he started to do "chart review". However, when the "chart review" strategy was tested with investor funds, it was not profitable. In the update, Lowrance also warned people against going to authorities, as investors' chances of getting their money back would be hindered if Lowrance was locked up. Lowrance was later arrested in Peru in 2011, and was subsequently extradited to the United States. He also faced charges by the Securities and Exchange Commission and Commodity Futures Trading Commission.
Along with this sentence, Lowrance was also ordered to pay restitution to his victims in the amount of $17.64 million.
A compilation of legal documents pertaining to Lowrance's case is here.
The SEC complaint is here.