Longbranch Group assets frozen in Ponzi scheme allegations

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained an emergency court order freezing assets held by defendants Jeremiah C. Yancy (a/k/a Jeremiah C. Glaub) of Atoka, Okla. and his company, Longbranch Group International LLC (a/k/a Longbranch LLC) (Longbranch) of Houston, Texas. The court’s order also prohibits the destruction of books and records and grants the CFTC immediate access to such documents.

The order stems from a CFTC enforcement action filed on August 18, 2010, in the U.S. District Court for the Southern District of Texas, charging Yancy and Longbranch with operating a Ponzi scheme that solicited at least 64 persons, including members of the church in which Yancy served as pastor. The complaint specifically alleges that the defendants solicited more than $1 million from at least 36 of the customers to invest in off-exchange foreign currency (forex) contracts and misappropriated at least $462,000 of customers’ funds.

Yancy and Longbranch told prospective customers that they managed forex trading for non-profit organizations, including churches and orphanages, the CFTC complaint charges. Further, the complaint alleges that the defendants solicited customers through various “fund-raising entities” to trade forex and invest in their other financial schemes. The defendants allegedly made misrepresentations to prospective customers through telephone conference calls set up by the “fund-raising entities.” These entities also passed defendants’ misrepresentations to customers via email.

Defendants allegedly promised customers monthly returns of 20 to 40 percent from forex trading and told some customers that their principal would be guaranteed. Instead, the majority of customer accounts managed by the defendants lost money, according to the complaint. Yancy and Longbranch told at least one customer that his money was not used to trade forex but to pay another customer, as is typical of a Ponzi scheme.

Yancy and Longbranch allegedly sent prospective customers account statements from demonstration forex trading accounts showing high returns from accounts purportedly containing up to $10 million traded by the defendants. Defendants, however, did not inform customers that these forex accounts were demonstration and/or test accounts and did not represent actual customer account trading, the complaint charges.

Defendants ordered to appear at court hearing on September 1

U.S. District Court Judge Keith P. Ellison ordered Yancy and Longbranch to appear in court on September 1, 2010, for a preliminary injunction hearing.

In its continuing litigation, the CFTC seeks a return of ill-gotten gains, restitution to defrauded customers, civil monetary penalties and permanent injunctions against further violations of the federal commodities laws and further trading.

The CFTC appreciates the assistance of the State of Idaho Department of Finance, which filed a related action against Yancy and Longbranch.

The CFTC Division of Enforcement staff responsible for this action are Andrew Ridenour, Elizabeth Davis, Jessica Harris, Erica Bodin, Kenneth McCracken, Rick Glaser and Richard Wagner.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome