Forex ponzi schemes fined by Virginia, Colorado federal courts

Safeguard 3030 Investment Club and Flint-McClung Capital LLC among defendants

Federal Court Orders Colorado Defendants Flint-McClung Capital LLC and Shawon McClung to Pay over $6 Million in CFTC Action Charging Them with Running Forex Ponzi Scheme

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that the U.S. District Court for the District of Colorado entered an order against defendants Flint-McClung Capital LLC(FMC), of Englewood, Colo., and Shawon McClung, formerly of Denver, Colo., requiring them jointly and severally to pay restitution of $1,701,250 and a $4.3 million civil monetary penalty. The order also imposes permanent trading and registration bans against the defendants.

The court’s order of default judgment and permanent injunction stems from a June 2011 CFTC enforcement action that charged FMC and McClung with fraud and misappropriation in an off-exchange foreign currency (forex) Ponzi scheme (see CFTC New Release 6063-11, June 30, 2011).

The order finds that, beginning in or about March 2010, the defendants fraudulently solicited and received at least $2.4 million from 20 customers by touting their success in trading forex. In their solicitations, McClung and FMC, through McClung and others, falsely represented that FMC had approximately $300 million in pool participant funds, which were segregated and in reserve, and used approximately $500 million in FMC proprietary funds to trade forex. However, according to the order, the defendants engaged in little, if any, trading on behalf of pool participants.

Of the funds solicited and received, the defendants, through McClung, misappropriated at least $1,701,250 for personal expenses, including approximately $70,000 to purchase automobiles, and to pay purported profit payments or return principal to customers and payments to unrelated individuals, according to the order.

The CFTC thanks the National Futures Association for its assistance.

CFTC Division of Enforcement staff members responsible for this case are Alison B. Wilson, Heather Johnson, Boaz Green, Gretchen L. Lowe, and Vincent A. McGonagle.

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