A recent case has emerged involving a Massachusetts man who has been charged with defrauding investors in a securities offering that targeted low-income cemetery workers. He has reached a settlement with regulatory authorities, agreeing to pay nearly $400,000 in penalties.
From January 2021 to August 2023, the accused solicited and accepted around $1.7 million from at least 34 individuals for investment purposes. He worked as an arborist in a cemetery since 1994, advancing to a supervisory role by 2019, but he possessed minimal formal investment training, with experience limited to managing a workplace retirement account and personal trading.
In 2019, he attended a two-week online course aimed at enhancing skills in personal trading. The second week of the training concentrated on Forex trading. Following the course, he utilized his own funds to engage in Forex transactions, experiencing both gains and losses.
After the course, he explored additional online resources about Forex trading, discovering that certain foreign brokerage firms offered substantial leverage—up to 500:1. This leverage allowed customers to control larger positions without directly borrowing funds. For instance, by using a $1,000 trading account with 200:1 leverage, one could trade with an effective capacity of $200,000, thus increasing potential returns but also risks.
He also researched automated trading systems known as “Forex Expert Advisors,” which claimed to follow algorithms for executing trades. One particular program, termed the “Barclays Expert Advisor,” caught his interest due to its claims of consistently generating impressive returns with minimal losses. However, his due diligence was limited to examining publicly available resources, and there was no legitimate connection between this software and the well-known financial institution Barclays.
The man shared information about his Forex investments with cemetery employees and church members, where he held leadership positions. He promoted the idea of achieving extraordinary returns through Forex trading and encouraged individuals to invest with the promise of repaying their principal plus interest within a year. Many of these investors were long-term acquaintances, often from his work or church community, and included numerous low-wage workers.
Beginning in early 2021, he started accepting investments from these individuals, some of whom were prompted to take personal loans, sometimes up to $50,000, with the assurance that he would help cover their repayments. Over the course of approximately two and a half years, he collected around $1.7 million in investments, with some contributions made in cash. However, he maintained no formal records to track investors or their contributions, leaving little documentation regarding the investment statuses.
As of August 2023, it was reported that most of the funds had been lost in various Forex investments. Furthermore, he allegedly misappropriated funds for personal expenses and utilized incoming investor money to make payments to earlier investors, resembling a Ponzi scheme.
The complaint filed by the Securities and Exchange Commission (SEC) in the U.S. District Court for the District of Massachusetts alleges significant violations of antifraud provisions of the Securities Act and the Securities Exchange Act.
In response to the allegations, he has consented to a permanent injunction, prohibiting future violations of the relevant securities laws, and agreed to disgorge over $250,000 along with interest and pay a civil penalty of approximately $118,000, pending court approval of the settlement.
This case highlights the risks involved in investment scenarios lacking sufficient oversight and the consequences of misleading investors, particularly those with limited resources.