July 15, 2011
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it charged Jeffery Alan Lowrance formerly of Houston, Texas, and his New Zealand-registered company, First Capital Savings and Loan (FCSL), with operating a Ponzi scheme that fraudulently solicited at least $1 million from approximately 36 members of the general public to trade off-exchange foreign currency (forex) contracts. Defendants allegedly have misappropriated most of these funds.
The CFTC complaint, filed in the U.S. District Court for the Northern District of Illinois on July 14, 2011, alleges that, from at least June 18, 2008 to the present, Lowrance and FCSL in their solicitations falsely claimed to be successful forex traders and promised customers fixed monthly returns ranging from 1.1 percent to at least 4.15 percent on their investment. To conceal and perpetuate their fraud, the defendants allegedly provide their customers with access to bogus account statements that falsely show that their accounts are increasing by as much as 4.15 percent per month.
According to the complaint, the defendants deposited no customer funds into forex trading accounts and have little experience trading actual money in forex. Rather, the defendants allegedly misappropriated customer funds to create a religious newspaper, pay personal expenses, and provide funds to Lowrance’s family members. The defendants also allegedly used customer funds to pay existing customers’ purported forex trading profits or for the return of principal, as is typical of a Ponzi scheme.
On August 5, 2010, Lowrance was indicted on federal fraud charges in connection with the operation of FCSL and Mentor Investing Group, Inc., which solicited members of the public to invest in forex through the Internet and mass mailings. On February 3, 2011, the Peruvian National Police – Interpol arrested Lowrance in Lima, Peru, and he was extradited to the United States on July 14, 2011. Lowrance was arraigned on the federal fraud charges on July 15, 2011 and is currently detained by Federal authorities.
The CFTC coordinated its investigation with the U.S. Attorney’s Office for the Northern District of Illinois. The CFTC also appreciates the assistance of the Securities and Exchange Commission, which filed a related action against Lowrance and FCSL in the Northern District of California on July 14, 2011.
In its continuing litigation, the CFTC seeks disgorgement of ill-gotten gains, restitution, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the federal commodities laws.
CFTC Division of Enforcement staff members responsible for this case Jennifer S. Diamond, Elizabeth M. Streit, Joy McCormack, Scott R. Williamson, Rosemary Hollinger, and Richard B. Wagner.
Last Updated: July 15, 2011