NFA Halts Alleged Futures Ponzi Scheme

Jun 5 2009 | 1:01pm ET

The National Futures Association has taken an emergency enforcement action against M25 Investments, M37 Investments, David Fearis, president of M25 and a director of M37, and Ronald Larson, president of M37.

Both firms are located in Waxahachie, Texas.

The NFA said its action was deemed necessary “to protect the investing public and futures markets based on evidence that M25 and M37 may be operating a Ponzi scheme in which they obtained loans from unsophisticated persons and in return gave these persons unsecured promissory notes that M25 and M37 have promised to repay.”

However, it appears that Fearis and Larson have allegedly funneled the borrowed funds to other entities controlled by principals of the firms and that there seems to be a $3.7 million shortfall between what is owed on the notes and the combined assets of M25 and M37.

In addition, Fearis and Larson continue to solicit loans, even though they don’t have the money to repay the existing loans and have failed to disclose this to their existing and prospective lenders.

Effective immediately, the NFA has banned Fearis and Larson from soliciting or accepting funds from investors and any loans from lenders without prior approval. The pair is also prohibited from placing any trades for themselves or customers. They are also prohibited from disbursing or transferring any accounts, which are in the names of or controlled by either M25 or M37.


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

iCapital Network: The Trump Effect On Direct Lending

Feb 23 2017 | 4:21pm ET

The arrival of the Trump Administration has raised questions among private debt...

 

From the current issue of