May 1, 2012
CFTC Charges Sidney J. Charles, Jr. and his Maryland-based Company, The Borrowing Station, LLC, in Forex Ponzi Scheme
Federal court in Maryland enters order freezing defendants’ assets and protecting books and records
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a federal court action charging Sidney J. Charles, Jr., formerly of Bowie, Md., and his company, The Borrowing Station, LLC (Borrowing Station), of Bowie, Md., with fraud, misappropriation, and registration violations in connection with an off-exchange leveraged foreign currency (forex) Ponzi scheme.
On April 23, 2012, the same day the complaint was filed, Judge Alexander Williams, Jr. of the U.S. District Court for the District of Maryland entered a restraining order freezing the defendants’ assets, prohibiting the destruction of books and records, and requiring Charles to appear before the court on May 4, 2012, for a preliminary injunction hearing.
The CFTC complaint alleges that from at least October 2009 through at least July 2011, Charles and Borrowing Station fraudulently solicited and accepted approximately $355,000 from at least 18 individuals to participate in a pooled investment vehicle that traded forex. In their solicitations, defendants promised substantial investment returns such as 25 percent per year or 10 percent per month, and falsely claimed that pool participant funds were guaranteed against trading losses. The complaint further alleges that Borrowing Station was unsuccessful in trading forex.
According to the complaint, defendants used pool participant funds to make purported profit payments to other participants. Charles is also charged with misappropriating pool participant funds to pay for personal expenses and to fund Borrowing Station’s operations. In total, the defendants allegedly misappropriated approximately $290,000.
According to the complaint, despite promises to return their money, Charles has not returned funds to pool particpants, and Charles moved to Raceland, La.
The CFTC complaint also alleges that Borrowing Station and Charles failed to register as a commodity pool operator (CPO) and associated person of a CPO, respectively, as required under the Commodity Exchange Act (CEA) and CFTC regulations.
In its continuing litigation, the CFTC seeks restitution to defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the CEA and CFTC regulations, as charged.
The CFTC appreciates the assistance of the United Kingdom Financial Services Authority.
CFTC Division of Enforcement staff responsible for this case are Melanie Bates, Kara Mucha, Kassra Goudarzi, Michael Solinsky, Gretchen L. Lowe, and Vincent A. McGonagle.
Last Updated: May 1, 2012