Canadian ran U.S. Ponzi scheme, fined

A U.S. District Court in New Hampshire entered final judgments last week against New Futures Trading International Corporation, a New Hampshire business, and Henry Roche for running a Ponzi scheme.

The Commission’s November 16, 2011 complaint alleged Roche, through New Futures, engaged in an ongoing unregistered offering of securities in the U.S. through operations in New Hampshire and Ontario, Canada.

Starting in December 2010, Roche offered and sold high yield promissory notes purportedly producing 5%-10% monthly returns, or a 200% return within 14 months. He transacted with at least 14 investors in nine states, and raised more than $1.3 million.

The SEC says Roche told some investors their funds would be invested in bonds, Treasury notes and 10-year Treasury note futures contracts. He told the rest their money would be invested in New Futures, a non-existent online futures day-trading training business supposedly operated in Canada.

Roche then used approximately $937,000 of investor funds to make Ponzi interest payments to investors in entities he controlled prior to running this scheme. He also misappropriated another $359,000 to operate a horse-breeding venture.

The court ordered the parties to pay a total of over $2.8 million, and requires both the company and Roche abide by the following final judgments:

(1) Permanent injunctions against both New Futures and Roche enjoining them from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder;

(2) Each must pay disgorgement of ill-gotten gains in the amount of $1,242,972 plus prejudgment interest of $40,917.47; and

(3) Roche must pay a monetary penalty in the amount of $150,000, while New Futures must pay a monetary penalty in the amount of $150,000.

In other news, the SEC recently issued an update of a previous scam alert, which warned investors of fraudsters who are posing as SEC employees and attempting to solicit personal and financial information.

The Commission has warned investors against calls where a supposed employee offers large sums of money—in some cases as much as $450,000—in return for dumping a small amount of cash into an unspecified account.

Although fraudsters may use a real company name and refer victims to an operating website, they are false claims. The Commission stresses it has never supported financial solicitation offers, offered assistance in the sale or purchase of securities, or endorsed money transfers.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.