For Release: March 18, 2009
CFTC Charges North Carolina Foreign Currency Firm Barki, LLC and Its Recently Deceased Principal Bruce C. Kramer in Alleged $40 Million Ponzi Fraud
North Carolina Federal District Court Issues Restraining Order Freezing Assets and Appointing a Receiver
Washington, DC –The U.S. Commodity Futures Trading Commission (CFTC) announced today that it charged Barki, LLC of Mint Hill, North Carolina, and Bruce C. Kramer with fraudulently soliciting at least $40 million to trade leveraged foreign currency contracts (forex), misappropriating at least $30 million of customer funds to pay purported profits, return principal to customers, and for personal expenses. The defendants concealed their fraud and trading losses through false account statements for over five years.
The Honorable Graham C. Mullen of the U.S. District Court for the Western District of North Carolina, on March 17, 2009, the same day the complaint was filed, entered an order freezing the assets of defendants and relief defendants, appointing a Receiver, and granting other relief, in order to marshal all assets and funds and achieve a fair and equitable distribution of assets to the defrauded customers. Customers should contact the Receiver, Charles E. Lyons, Esq., at (704) 377-5050.
Defendants’ fraud became known to customers on or around February 25, 2009, when Bruce Kramer, who resided in Midland, North Carolina, committed suicide.
The CFTC’s civil complaint also names Rhonda Kramer, wife of Bruce Kramer, and Forest Glenn, LLC, a horse farm owned by the Kramers, as relief defendants. The CFTC seeks repayment of all funds or assets they received as a result of defendants’ fraudulent conduct to which they have no legitimate entitlement.
“Given the circumstances, the CFTC’s primary goal with this action is to ensure any existing assets are protected from further dissipation and fairly returned to customers,” stated CFTC Acting Director of Enforcement Stephen J. Obie.
According to the CFTC complaint, since at least June 2004 through February 2009, Barki, LLC and Bruce Kramer solicited at least $40 million from at least 79 individuals or entities for the purported purpose of trading forex. Defendants claimed success in trading forex, promised little risk using Kramer’s trading system, and lured customers with promises of monthly returns of at least 3 percent to 4 percent.
The complaint alleges that, in reality, defendants sustained trading losses of at least $10 million trading margined or leveraged forex, and otherwise ran a Ponzi scheme by using approximately $20 million of customers’ funds to make payments to customers. Defendants spent the remaining funds on personal expenses, including the purchase of a horse farm for more than $1 million, a Maserati sports car and other luxury cars, artwork, and extravagant parties.
Defendants issued false monthly and annual statements to customers showing purported profits earned from their trading and reflecting that defendants were taking a fee of at least 20 percent based on those purported profits, the complaint alleges. Following recent media coverage about Ponzi schemes and in response to customer questions regarding their investments, defendants created fictitious trading records showing that the trading account held approximately $59 million. In fact, the accounts held $1 million or less. Today, only $575,000 remains in trading accounts and the complete disposition of customer funds is unknown.
In its continuing litigation, the CFTC is seeking preliminary and permanent injunctions, return of funds to defrauded customers, disgorgement of ill-gotten gains, and civil monetary penalties.
The CFTC wishes to thank the Federal Bureau of Investigation, Charlotte Division, and the National Futures Association for their assistance in this matter.
The following CFTC Division of Enforcement staff are responsible for this case: Anne M. Termine, Stephen M. Humenik, Maura Viehmeyer, Judith Hutchison, Stephen Tsai, Michelle Bougas, Gretchen L. Lowe, and Vincent A. McGonagle.
Last Updated: March 18, 2009