CFTC alleges $3.3 M forex Ponzi scheme

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that it charged Ronald E. Satterfield of Charleston, S.C., his South Carolina-based companies, Graham Street Forex Group, LLC and Shore-2-Summit Financial, LLC, and Nicholas Bos of Ludington, Mich., with operating a foreign currency (forex) Ponzi scheme that fraudulently solicited more than $3.3 million from more than 70 individuals in South Carolina, North Carolina, Michigan and Maryland. The defendants also allegedly misappropriated a significant portion of customer funds for their personal use.

The CFTC complaint, filed under temporary seal on November 8, 2010, also names Bos’ wife, Patricia L. Bos, as a relief defendant, because she allegedly received funds as a result of the defendants’ fraudulent conduct and has no legitimate entitlement to those funds.

On November 9, 2010, the Honorable Richard M. Gergel of the U.S. District Court for the District of South Carolina entered a restraining order freezing the defendants’ assets and prohibiting the destruction of books and records. The order also requires defendants to account for assets.

Specifically, the CFTC complaint alleges that, from at least March 2006 through March 2009, defendants solicited and accepted funds from retail investors to engage in leveraged or margined forex transactions. The CFTC complaint charges that Satterfield, in his solicitations, misrepresented that he was a successful forex trader, falsely guaranteed customers monthly returns of two to four percent based on his forex trading and falsely claimed that there would be no risk to customers’ principal investment. Satterfield allegedly made material omissions of fact by failing to disclose that 1) not all of the customer funds that he, Graham Street and Shore-2-Summit collected were used to trade forex and 2) customer funds were used to pay returns to other customers and for payments to Bos and other agents, as is typical of a Ponzi scheme.

Despite receiving at least $3.3 million from customers since 2006, Satterfield placed only about $1.9 million of customers’ funds in known forex trading accounts, virtually all of which was lost as a result of his unsuccessful forex trading. Overall, Satterfield failed to generate any profits through his forex trading, according to the complaint.

The complaint charges that, to conceal and perpetuate their fraud, Satterfield and Bos issued false customer account statements reflecting the promised returns and forex trading profits, when in fact Satterfield’s forex trading resulted in losses almost every month. The false statements also allegedly concealed their misappropriation of customer funds. In total, the complaint charges Satterfield and Bos with misappropriating more than $850,000 of customer funds for personal use. Defendant Bos, for example, allegedly used $295,000 of customer funds to purchase a personal residence in Michigan, which was titled in the names of Nicholas and Patricia Bos. Since March 2009, defendants have failed to make promised monthly customer payments and to honor customers’ redemption requests, according to the complaint.

In its continuing litigation, the CFTC seeks rescission of all contracts and agreements, restitution to defrauded customers, a return of ill-gotten gains, civil monetary penalties, permanent registration bans and a permanent injunction prohibiting trading and further violations of the federal commodities laws.

CFTC Division of Enforcement staff members responsible for this case are Jennifer Diamantis, Patricia Gomersall, Christine Ryall, Paul G. Hayeck and Joan Manley.

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