CFTC Charges Forex Firm With $40 Million Ponzi Scheme

Mar 26 2009 | 2:23am ET

The U.S. Commodity Futures Trading Commission has charged Barki of Mint Hill, N.C., and principal Bruce Kramer with running a Ponzi scheme. Barki and Kramer fraudulently soliciting at least $40 million to trade leveraged foreign currency contracts, and misappropriating at least $30 million to pay purported profits, return principal to customers, and for personal expenses, according to the charges.
 
The CFTC said that, since at least June 2004 through last month, when he committed suicide, Kramer solicited some $40 million from 79 individuals or entities, promising little risk, luring customers with promises of monthly returns of at least 3% to 4%.

In fact, Kramer allegedly sustained trading losses of at least $10 million trading margined or leveraged forex, and otherwise ran a Ponzi scheme by using approximately $20 million of investors’ funds to make payments to other investors, according to the CFTC. The regulator said Kramer spent the remaining funds on personal expenses, including the purchase of a horse farm for more than $1 million, a Maserati sports car and other luxury cars, artwork, and extravagant parties.

Today, only $575,000 remains in trading accounts and the complete disposition of customer funds is unknown. Kramer’s fraud surfaced only after his death.

The CFTC’s civil complaint also names his wife Rhonda Kramer and Forest Glenn, a horse farm owned by the Kramers, as relief defendants. The CFTC seeks repayment of all funds or assets they received to which they have no legitimate entitlement.


In Depth

Q&A: TCA Fund Management's Bob Press on Small-Cap Private Equity

Aug 25 2016 | 8:55pm ET

The emergence of private credit as a replacement for traditional bank financing...

Lifestyle

Kiawah: Island Reversal

Aug 24 2016 | 9:59pm ET

Looking for real estate investments but the typical real estate fare isn’t cutting...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...