For Release: November 20, 2008
Utah-Based 4NExchange and Two Individuals Ordered to Pay $720,000 in Penalties to Resolve CFTC Charges of Fraud and Misappropriation in Foreign Currency Scam
Washington, DC ― The U.S. Commodity Futures Trading Commission (CFTC) announced that a federal court judge ordered defendants 4NExchange, a Utah limited liability company, Paul R. Grant, formerly of Alpine, Utah, and Ronald K. Bassett formerly of Lindon, Utah, to pay a total of $720,000 in civil monetary penalties as a result of violating the anti-fraud provisions of federal commodities law.
The Honorable Dale A. Kimball, United States District Court Judge for the District of Utah, entered the orders on April 25, 2008 and November 18, 2008, 2008. Specifically, the orders hold 4NExchange and Bassett jointly and severally liable for a $480,000 civil monetary penalty and Grant liable for a $240,000 penalty. Each defendant is also permanently prohibited from engaging in any business activities related to commodity trading.
The court found that, since at least April 1999 to May 2002, Grant and Bassett owned 4NExchange and operated it as a purported foreign exchange (forex) futures business. In reality, little trading took place and 4NExchange operated as a massive Ponzi scheme, whereby new customers’ funds were not used for trading, but to pay so-called “profits” to pre-existing customers. 4NExchange purportedly engaged in buying and selling forex futures contracts and promised high returns. Grant and Bassett perpetrated this fraud on customers by making false statements concerning past performance and profit expectations, and by misappropriating customers’ funds for their personal benefit and to pay purported profits to earlier customers. In all, 4NExchange had 220 customers, who invested over $30 million to buy and sell forex futures. Of those customers, 187 lost a total of $18,645,121.89, the court found.
The court’s action resolves CFTC charges against the three defendants arising from CFTC v. 4NExchange, et al., 2:02cv0432 (D. Utah). (See CFTC Press Release 4636-02, May 2, 2002.)
Bassett and Grant Are Currently Incarcerated in Federal Prison
On or about January 16, 2003, in connection with the same misconduct at issue in this CFTC action, Bassett and Grant were criminally indicted in the U.S. District Court for the District of Utah for conspiracy to commit fraud, money laundering, wire fraud, and transportation of stolen money (United States v. Ronald Keith Bassett, Case No. 03CR 039 [D. Utah] and United States v. Paul R. Grant, Case No. 03CR 310 [D. Utah]). As a result of this action, Bassett and Grant entered guilty pleas and are each currently serving 60-month sentences in federal prison. Also In this action, Bassett and Grant were each ordered to pay victims $18,645,121.89 in restitution.
The CFTC wishes to thank the Utah Division of Securities for the invaluable assistance it provided in this case.
The following CFTC Division of Enforcement staff is responsible for this case: Timothy J. Mulreany, Todd Kelly, Paul Hayeck, and Joan Manley.
Last Updated: November 20, 2008