Two US federal regulatory agencies have filed lawsuits against a Hawaii businessman, accusing him of operating a foreign exchange ponzi scheme that conned deaf investors in the US and Japan out of almost $3 million.
In separate complaints filed in the federal court in Honolulu, the Securities and Exchange Commission and the US Commodity Futures Trading Commission allege that from September 2007 to January 2009 Billion Coupons, Inc. (BCI) and its CEO Marvin Cooper sought investors to engage in foreign currency trading.
Through his website, seminars and personal contact, Cooper was able to raise $4.4 million from at least 125 American and Japanese investors, all of whom were deaf, according to the CFTC.
The complaints allege that BCI and Cooper, whom the regulators say is deaf himself, represented to the investors that their funds would be invested in the forex markets, that investors would receive returns of up to 25% compounded monthly from such trading, and that their investments were safe.
In documents obtained by the SEC, many people said they were investing their life savings with Cooper and BCI to improve their lives as well as help the hearing-impaired community.
According to the complaints, BCI and Cooper actually invested only about $800,000 of the $4.4 million on the foreign exchange market, but lost more than $750,000. The complaints further allege that Cooper misappropriated more than $1.4 million of customer funds for personal use, including flying lessons and to buy a $1 million home.
He also allegedly failed to generate sufficient funds from forex trading to pay the promised returns, and instead operated as a Ponzi scheme by paying returns to existing investors from funds contributed by new investors.
Despite the losses, Cooper sent false monthly statements to his investors, reporting profits as high as 25%. In late 2008, however, the scheme began to collapse and on 20 January, Cooper sent a letter to investors, informing them that he was under federal investigation. He wrote that he “has nothing to hide because BCI’s activities are lawful,” according to the SEC lawsuit.
“This case is a clear example of affinity fraud: Cooper preyed upon the deaf community to leverage and exploit the inherent trust within so that his scheme would prosper. The CFTC urges the public to be cautious with their investments even when opportunities are presented by those with whom they have an association,” says CFTC acting director of enforcement, Stephen Obie.