Federal authorities charged a North Carolina man with operating a foreign currency Ponzi scheme that duped at least 500 investors out of nearly $5 million. James H. Mason, 66, was charged with a single count of securities fraud, which carries up to a twenty-year prison term as well as a $5 million fine.
According to the indictment, Mason operated JHM Forex Only Pool ("JHM Forex") and Forex Trading at Home Association ("Forex Trading"), which purported to engage in trading in over-the-counter foreign currency exchange ("forex"). Mason told potential investors that he had over 35 years of experience investing in commodity futures and options trading, and promised substantial returns. Based on these representations, at least 500 investors were induced to invest nearly $5 million with Mason and his entities.
However, Mason did not have 35 years of experience in forex trading. Instead of achieving significant gains trading forex, Mason is alleged to have operated a classic Ponzi scheme, using new investor funds to pay purported returns to existing investors. Mason also misappropriated investor funds for his personal use, including the payment of personal and business expenses, and the purchase of real estate and cars.
Of the nearly $5 million raised from victims, Mason used only a small percentage of funds for actual forex trading, which resulted in nearly total losses. Investors were not told of these losses; rather, they were provided with falsified statements showing that their accounts were profitable. Investors were also provided with an online account portal where they could track their account's progress and see their growing balances. According to authorities, this was all false, and in many cases the investor accounts were empty.
Mason has been in federal custody since April 15, 2013.