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Last Thursday it was decided that a Palm Beach County, Florida man was sentenced to 27 months in federal prison, following his wire fraud and criminal contempt convictions. David Lee Ortiz, 39, of Palm Beach County, was sentenced by United States District Judge Robin L. Rosenberg in Fort Pierce, following his prior plea of guilty to telemarketing wire fraud, in violation of Title 18, United States Code, Section 1343 and contempt of court, in violation of Title 18, United States Code, Section 401(3).
According to statements made in court and documents filed in the case, Ortiz committed online and telemarketing fraud in the form of fraudulent forex investment scams, via the internet and email, among other means. Ortiz collected from his victims approximately $420,000 through fraudulent websites and advertisements offering returns of 10% per month on forex contracts and currency trades. Ortiz represented that investor funds would be kept in individual investor accounts for his clients, but they were in fact aggregated and commingled.
The defendant invested some of the money with losing forex positions at two licensed Futures Commission Merchants. The remainder of the money Ortiz diverted for his own personal use.
To attract investors, Ortiz established internet websites. In July 2008, Ortiz set up “forexisgreatfor.me,” on which he falsely claimed to have over thirty years in forex trading experience, as well as that he was registered with the Securities and Exchange Commission. In October 2009, Ortiz also established the website “forexfuturestrader.com,” again falsely claiming to provide daily updates accessible online for individualized investor accounts, as well as promising 100% returns within 12 months.
Ortiz misappropriated at least $232,000 by, for example, using the funds for personal shopping at retail department stores, travel, resort hotels, restaurants, utility bills, personal credit cards and car payments, and by sending, or having some customers send their funds directly, to Ortiz’s wife and her business, who also did not use those funds for forex trading. Between 2008-2011, Ortiz solicited and accepted investments from clients, placed the monies in accounts he personally controlled, invested some of it in losing forex trades, and used the remainder for personal purchases. Ortiz created false account statements, purporting to show the clients that they were making profits on imaginary forex contracts placed for them by Ortiz. When customers tried to recover all or part of their monies, usually in accordance with withdrawal provisions of a written contract which Ortiz had them sign, they regularly met evasion or delay from Ortiz.
The Commodity Futures Trading Commission (CFTC) investigated Ortiz, and filed a civil enforcement action against him in the Southern District of Florida in February 2011. The CFTC sought Court orders directing rescission of the investment contracts and return to the investors of all their monies. Chief United States District Judge K. Michael Moore signed a permanent injunction against Ortiz on June 30, 2011, directing Ortiz to return the investors’ money and rescind all the investment contracts. The injunction also forbade Ortiz from soliciting or accepting funds from any future investors.
During July and August 2011, Ortiz nonetheless continued to solicit and accept funds from investors. In particular, he met with and took $2,800 from a retired Air Force employee living in Odessa, Texas. Twice in September 2011, Ortiz emailed the investor false account statements purporting to show gains and profits from forex trades. The CFTC filed a motion for civil contempt against Ortiz for his failure to abide by the permanent injunction. On June 4, 2012, Chief Judge Moore held an evidentiary hearing on the civil contempt motion, at which Ortiz appeared pro se. Following the hearing, the CFTC filed a joint proposed agreed order (which the Court approved and entered on June 6, 2012) setting forth a timetable for Ortiz to submit a sworn accounting and repayment of monies, no later than August 6, 2012. On August 6, 2012, Ortiz filed a document with the Court, stating that he had received the $2,800 from the Texas investor, but that Ortiz was unable to comply and pay any monies to the aggrieved investors.
For the official release on the case click here.