In a curious twist of irony, a complaint recently filed by the United States Commodity Futures Trading Commission alleges that funds were fraudulently solicited from an individual later revealed to be operating his own separate Ponzi scheme.
According to the CFTC complaint, Mark Rice and Financial Robotics Inc. (the "Defendants") advertised a "risk-free" foreign currency trading operation that had generated 'phenomenal returns' of thirty percent per month in test situations in American and European markets. One of these investors, Robert Copeland, entrusted $10.4 million to the defendants after being guaranteed the return of his principal and promised that the investment was insured against loss.
However, Copeland did not invest his own funds with the Defendants. Instead, according to the CFTC, "the funds invested by Copeland were funds that he fraudulently obtained from individuals in connection with a separate fraud Copeland was perpetuating and for which he pled guilty to federal wire fraud charges." Copeland pled guilty in April 2009 to soliciting funds from at least 125 investors for investing in related real-estate activities, and was subsequently sentenced to over 10 years in prison by a Georgia federal judge.
After continuing to pay purported interest payments to Copeland, the Defendants informed Copeland in November 2008 that all funds had been lost, and that the trading had not been insured against loss. Copeland demanded the return of his principal investment, but received less than $1 million from the Defendants. The CFTC recently obtained a preliminary injunction against the Defendants during the pendency of litigation.