LeapRate's Daily Forex Industry Newsletter
Join now to receive first access to our EXCLUSIVE reports and updates.
Screenshot of a breaking news alert e-mail from Q2 2017
Stafford S. Maxwell, the former owner and Chief Executive Officer of Millennium Capital Exchange, Inc., was sentenced to three years, nine months years in prison for orchestrating a multi-million dollar forex trading Ponzi scheme. Back in June Mr. Maxwell pleaded guilty to 10 counts of wire fraud for orchestrating the multi-million dollar foreign exchange market ponzi scheme.
“With false promises of trading success, Maxwell defrauded investors across the country out of more than $2 million,” said U.S. Attorney John Horn. “To those tempted by investment schemes that seem too good to be true – be cautious – because promises of high rates of return are often red flags for fraud.”
“The FBI continues to see such investment based fraud cases that offer their investors high rates of returns with minimum or no risk. While many of the victim investors are still trying to recover financially, it is hoped that they find some solace in today’s sentencing of Mr. Maxwell to federal prison,” said J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office.
According to U.S. Attorney Horn, the charges, and other information presented in court: In March 2007, Maxwell incorporated and owned Millennium Capital Exchange, Inc. (“Millennium”), which purported to be a foreign exchange market trading firm. The foreign exchange market (or forex market) is the global market in which participants buy, sell, exchange, and speculate on currencies. The forex trading market consists of banks, commercial companies, central banks, investment management firms, hedge funds, retail forex brokers, and individual investors. Forex trading involves the trading of currencies from different countries against each other. An example of a forex trade is buying Japanese yen while simultaneously selling United States dollars. Trading in foreign exchange markets frequently exceeds $5 trillion per day.
From about 2008 to January 2012, Maxwell solicited investments from individuals across the United States with promises of high fixed rates of return to be generated from successful foreign currency trading. In particular, to obtain money from investors, Maxwell falsely stated that: (a) he possessed excellent forex trading skills; (b) he had a long history of forex trading success; (c) investors would earn an annualized rate of return on their investments from approximately 48% to 72%; (d) he used “stops” and “floors” on currency trades to insure that the gains would be large, but that the losses would be small; (e) investors had realized significant gains based on his trading; and (f) he had reserve funds that enabled him to cover any trading losses.
In fact and in truth, Maxwell: (a) had little success executing forex trades; (b) lost almost all the money that he traded in forex markets; (c) was unable to pay investors the promised investment dividends; and (d) possessed no reserve fund to cover forex trading losses.
According to Millennium’s business model, Maxwell was supposed to use the invested funds to make forex trades through accounts at a financial firm in Geneva, Switzerland. Based on his false representations, investors wired Maxwell over $2 million, expecting that the funds would be traded in the Swiss accounts. After receiving money from investors, however, Maxwell diverted approximately half of the money for other illegal purposes. First, in an effort to perpetuate the scheme and make it appear that he was a successful forex trader, Maxwell used the money received from new investors (that was supposed to be traded on the forex market) to pay “dividends” to older investors. Second, Maxwell used the money received from investors to pay his own personal living expenses. In the end, Maxwell spent or lost almost every dollar invested with him.
On March 17, 2015, Stafford S. Maxwell, 46, of Mableton, Georgia, was indicted on 10 counts of conspiratorial and substantive wire fraud. Maxwell pleaded guilty to all the charges on June 29, 2015.
This case was investigated by the Federal Bureau of Investigation.
Assistant U.S. Attorney Jeffrey W. Davis prosecuted the case.
To view the official release click here.