The US Commodity Futures Trading Commission (CFTC) has obtained a default judgment and permanent injunction against Jeffery Alan Lowrance, formerly of Houston, Texas, and his New Zealand company, First Capital Savings and Loan (First Capital). They are required to pay jointly and severally a USD3.3 million civil monetary penalty and USD1.2 million in restitution for a fraudulent off-exchange foreign currency (forex) scheme.
The consent order also imposes permanent trading and registration bans against Lowrance and First Capital and requires any person or entity providing web-hosting or domain registration hosting services for the defendants to remove from the Internet any websites that solicit customers to trade commodity futures or forex.
The order, entered by Judge Elaine E Bucklo of the US District Court for the Northern District of Illinois, finds that since at least June 2008 through at least February 2011, Lowrance and First Capital fraudulently solicited at least 36 investors to trade forex by falsely claiming to be successful forex traders. They promised 1.1 per cent to 4.15 per cent monthly returns on investments and posted false customer account statements on First Capital’s website showing monthly profits.
The court also found that the defendants failed to deposit customer funds into forex trading accounts and, instead, misappropriated all of the customers’ funds. Lowrance and First Capital used customer funds to finance the creation of a religious newspaper, provide funds to Lowrance’s family members, pay Lowrance’s personal expenses, and pay purported profits or the return of principal to existing investors, in a manner typical of a Ponzi scheme, according to the order.
The CFTC coordinated its investigation with the U.S. Attorney’s Office for the Northern District of Illinois, which indicted Lowrance for allegedly operating a USD25 million fraud scheme and obtained his extradition from Peru (see USA v. Jeffery Lowrance, 09 CR 00578 (Aug. 5, 2010, N.D. Ill.) (Norgle J.)).