For Release: March 9, 2010
CFTC Charges Texas Resident Willie L. Cloud, Jr. and His Investment Company, C & R Financial, with Operating a Foreign Currency Ponzi Scheme
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it charged Willie L. Cloud, Jr. and his investment company, C & R Financial, Inc., both of Houston, Texas, with operating a Ponzi scheme in connection with foreign currency (forex) trading.
The CFTC’s complaint, filed on March 4, 2010, alleges that, since at least April 2008, Cloud and C & R Financial solicited at least $200,000 from individuals for the sole purpose of trading forex. Allegedly, the defendants promised several customers that they would each have personal accounts at a registered futures commission merchant, through which defendants would trade forex for them. The defendants allegedly lured customers with promises of doubling or tripling their investments within a year through forex trading gains.
Defendants, however, opened an account in Cloud’s name, deposited only a portion of customers’ funds into the account and misappropriated at least $75,000 of customer funds for personal use, according to the complaint. The complaint also charges that defendants sent false account statements to customers showing large profits, when, in fact, defendants’ forex trading resulted in substantial losses. Defendants allegedly returned approximately $36,000 to customers as redemption of principal and purported “profits.” Because the defendants lost a substantial portion of customer funds in forex trading, the complaint alleges that the redemptions and purported “profits” came from the principal invested by existing or subsequent customers, thus constituting a Ponzi scheme.
Federal Court Sets Preliminary Injunction Hearing for April 1, 2010
On March 9, 2010, the Honorable Gray H. Miller of the U.S. District Court for the Southern District of Texas ordered Cloud and C & R Financial to appear in court on April 1, 2010 at 1:00 pm for a preliminary injunction hearing.
In the continuing litigation, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties and a permanent injunction prohibiting further violations of the federal commodities laws.
The following CFTC Division of Enforcement staff members are responsible for this case: Andrew Ridenour, Patrick Pericak, Michael Loconte, Jessica Harris, Kenneth McCracken, Rick Glaser and Richard Wagner.
Last Updated: April 2, 2010