For Release: May 26, 2009
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today charged Robert D. Watson (Watson), Daniel J. Petroski (Petroski), a Texas lawyer and certified public accountant, both of Houston, Texas, PrivateFX Global One Ltd., SA (Global One), allegedly a Panamanian corporation, and 36 Holdings Ltd. allegedly of the United Kingdom and/or Switzerland with orchestrating a multi-million dollar fraudulent off-exchange foreign currency (forex) scheme.
The CFTC in its civil lawsuit, filed in the U.S. District Court for the Southern District of Texas, alleges that to entice investors to purchase shares in Global One, Defendants touted their supposedly extremely successful historical performance of forex trading. Defendants claimed forex trading returns that ranged from approximately 6 percent to 10 percent quarterly from January 1, 2000 through June 30, 2006, without ever having a losing quarter.
The CFTC’s complaint further alleges that since beginning operations in 2006, approximately 60 investors purchased approximately $19.5 million of shares in Global One. Defendants have reported returns, purportedly generated almost exclusively through forex trading, to Global One investors of approximately 1.5 percent to 3 percent each month and claimed never to have had a losing month trading forex. In fact, Defendants claimed in monthly individual investor reports, Global One’s financial statements, and on Global One’s website, among other places that almost all of their individual forex trades since January 1, 2008, resulted in a profit. According to the complaint, Defendants’ representations to Global One investors regarding Global One’s extraordinary forex trading profits and the concomitant returns these investors supposedly enjoyed are false.
The complaint further alleges that to conceal their fraud from the CFTC, Defendants provided the CFTC with falsified account statements showing supposed profitable forex trades at an international brokerage house from January 1, 2009 to April 30, 2009. These statements purport to detail more than 100 separate forex transactions that resulted in forex trading profits of $7,465,629 in the 36 Holdings trading account from January 1, 2009 to April 30, 2009, of which $2,096,377 was allocated as profits for Global One. The complaint alleges that these account statements are fictitious. Further, the complaint alleges that Defendants produced to the CFTC false Swiss bank statements for 36 Holdings in an attempt to conceal Defendants’ fraud and discourage further investigation by the CFTC.
In filing this lawsuit, CFTC Acting Director of Enforcement Steve Obie commented, “This CFTC litigation shows that even those with seemingly upstanding reputations and trustworthy positions are potential fraudsters. I continue to caution investors to vigorously and continuously question anyone to whom they entrust their hard-earned cash, even those who seem above and beyond reproach.”
Court has set a Status Conference for May 29, 2009.
At the request of the CFTC, on the same day the complaint was filed, U.S. District Court Judge Sim Lake froze Defendants’ assets and permitted the CFTC to seize all relevant records in their possession. Judge Lake also appointed Thomas Taylor as a temporary receiver. Mr. Taylor will be establishing a website to provide information to investors (www.privatefxreceivership.com).
No date has been set for a preliminary injunction hearing.
In the continuing litigation, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties, and permanent injunctions against further violations of the federal commodities laws and against further trading.
The CFTC appreciates the assistance of the Fort Worth Regional Office of the Securities and Exchange Commission, which simultaneously filed a related emergency action against all the Defendants.
The following CFTC Division of Enforcement staff members are responsible for this case: Charles Marvine, Braden Perry, Christopher Reed, Jill Warren, Rick Glaser and Richard Wagner.
Last Updated: May 29, 2009