A Texas company and its two officers were charged by the Commodity Futures Trading Commission ("CFTC") with operating a foreign currency Ponzi scheme that promised returns exceeding 200% annually and allegedly took in more than $5 million from investors. GID Group, Inc. ("GID") and its agent and officers, Rodney Wagner and Roger Wagner (the "Wagners"), both of Grand Prairie, Texas, were charged with multiple violations of the Commodities Exchange Act.
According to the CFTC Complaint, the scheme began in February 2010, when GID and the Wagners solicited victims to participate in a commodities trading system that promised annual returns exceeding two hundred percent. Investors were told that their funds would be used to trade off-exchange forex contracts on a leveraged or margined basis. Many of these investors were members of the Wagners' church congregation and their families and friends. Investors were required to invest a minimum of $10,000 which would then be locked into GID's trading system for a specified amount of time, usually less than a year. GID and the Wagners provided investors with a schedule of weekly returns. However, according to the CFTC, GID never maintained a forex trading account with any forex trading firm. The Wagners maintained joint forex trading accounts in which they deposited nearly $600,000 in investor funds and which sustained losses of at $440,000. The majority of funds, $4.5 million, were paid back as weekly returns to investors, along with additional funds that were misappropriated by the Wagners.
The CFTC is seeking relief including permanent injunctions banning association in commodities trading, disgorgement of ill-gotten gains, restitution, rescission of commodities contracts, and civil monetary penalties.
A copy of the complaint filed by the CFTC is here.