Latest Billion Dollar Forex Fraud even fooled two doctors

Tom Cleveland

A twist on a recent ad slogan might read, “Fraud comes at you fast!” Our high school English teacher may have preferred the use of “quickly”, but the message is what really counts – you must continue be ever vigilant and skeptical when it comes to fraud prevention. The first lesson is to be always wary of the source of a potential fraudster, whether it be via direct mail, email, text message, or even word of mouth or a contact at an organization that you belong to. The latest billion-dollar forex fraud, however, did not follow this pattern, which is a little scary. It actually waited in the weeds for you to find it.

The website’s name for this clever hoax, curiously enough, was There was no need for a well-designed outreach program to corral unsuspecting marks. A simple Google search would deliver most of the unwary, as web statistics revealed. Word of mouth handled the rest. And what greeted you on their Home Page? A soothing message of empathy for those tired and weary of losing money in currency trading pursuits: “Ninety percent of traders in forex end up losing money.” The text went on to say that it would remove your worries, guarantee your principal, and deal with all of the endless decisions involved in forex trading. The worst you could do was break even.

Is the hook set? Are you beginning to feel reeled in? But, wait; to sweeten the deal, your returns would average 1% a month, and to gain your trust, the fictitious broker published its daily winning and losing trades right there on the website, as evidence of its prowess and seeming (perhaps, “unseemly” is a better choice of word) transparency. Is there anyone out there that could not produce a favorable trade ledger “after the fact”? Since 2013, this simple ploy was a magnet. By March of 2014, the site was drawing more traffic than the largest forex brokers in the United States. Average visitors reviewed seven pages on the site while staying for as many minutes. And it was all a lie!

Timing is everything!

Forex fraud usually perpetuates itself because of a healthy greed quotient amongst the investing public. Greed definitely played a huge roll in this scheme, but the crooks were smart enough to take advantage of global economic conditions when developing this shrewd ruse. Since 2008 and the onset of the Great Recession, central bankers in the major developed countries in the northern hemisphere have dropped interest rates to near-zero levels and sustained them there. The goal was to stimulate more risk taking among investors, but it actually created a global capital stampede, always in search of the next higher return offering. The investment community was ripe for the picking.

Law enforcement officials will also tell you that the highly educated among us are the easiest to defraud when the scheme is complex in nature. It comes as no surprise that people that have invested many additional years in higher education, often only rubbing elbows with people of a similar cultural persuasion, are programmed to be more trusting. When confronted with a complicated investment idea, their pride steps in to take a fall. The article that Bloomberg recently published about this fiasco showcased a husband and wife, both medical doctors in the U.K., who had each been duped for $30,000 after spending three months studying the potential investment.

The husband and wife duo might also have been persuaded by the many convincing client testimonials on the website, 54 in all. Upon investigation, it was determined that several were paid actors that had nothing to do with “Every year, I’ve watched my ROI grow,” one actor says. “I’m getting closer and closer to my retirement goals. They take all the stress out of it.” But as another paid-testimonial giver admits, “I’m an actor; actors lie for a living.” There are ample laws prohibiting false endorsements, such as these, in both the U.S. and the U.K., but why would a criminal be intimidated by such rules after committing more radical felonies in his pursuit?

Were there any obvious “red flags” to tip off the unwary?

Many of the obvious red flags have already been discussed, but there was an abundance of other suspicious activities that screamed “FRUAD” in capital letters at every turn. To begin with, all of the addresses posted on the site were fictitious. If anyone had checked the whereabouts of listed offices in Hong Kong, London and Sydney, no confirmation would have been found.

There were also several corporate-type entities concocted to produce a confusing financial web of intrigue, from Belize and the British Virgin Islands, all the way back to the U.K.  These apparent licenses added to the credibility of the firm and were necessary in order to secure bank accounts for payment transactions. Payment advices should have been another tip off, since banks were continually changing.

One week you might be instructed to wire funds to a bank in Australia, and then the next, one in Cyprus, Latvia and Poland. Depositors were counseled that, “From time to time, Secure Investment may change bank account information, because it chooses the financial partner that currently offers more profitable cooperation conditions.” A toll-free call to phone numbers in Australia, Canada, Hong Kong, the U.K. and the U.S. would be cordially handled, but no exact locations were ever given out. Customer service had been outsourced to an independent firm that followed the scripts that it had been given.

Concluding Remarks

As is usually the case with this type of fraud, many innocent investors lost their life savings. Withdrawal requests, which were generally delayed for long periods of time, eventually were ignored. On May 1, the website disappeared. The slick marketing videos depicting huge staffs and gleaming offices and trading rooms also vanished. One disbelieving investor finally had to admit, “I want these people to be stopped so in the future, nobody will dare do this again. It is very important to do something against them. I think they should definitely be put into jail.”

It is doubtful that any funds will be recovered. Bank account information is the only legitimate evidence that exists at the moment. The CEO of the firm was purported to be Michael Sterling in the firm’s videos, but we suspect that he was but one more paid actor, performing another gig for small change. The simple reprise that sums up this debacle, as offered by one distraught client, was, “We suspected it was too good to be true.“ Customers in 11 countries on five continents have the same regrets after losing what is estimated to be over $1 billion in funds. Trust your gut next time around!

Tom Cleveland

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