Foreword

Every single day, someone somewhere makes a gigantic mistake by giving his or her money to a fraudster. I’m not referring to those “suckers born every minute” types. I’m talking about regular, hardworking folks who play by the rules and think they are making sound investment decisions, often with significant sums of their non-disposable cash. Smooth talking masters of illusion are out there, twisting and turning their stories to convince would-be investors to hand over their funds. The consequences for these “investors” turned victims can be horrific: people losing money for their kids’ college funds; for detrimental health care expenses; or for their own retirement. Some lose their entire life savings. Others unknowingly bring friends and family into the scam thinking they are doing them a favor.

A lot of times, fraudsters remain off the radar and get away with their swindles for years and even decades. Many individual investors don’t discover the fraud until they are faced with an economic downturn or some time-sensitive need. Then, when they try to retrieve their investments, they are told, “Nope, you can’t have your money back right now.” That’s when they discover that they have given their money to a fraudster. The funds were all part of a scam and the money is simply gone—kaput.

What the fraudsters do in that time is even more amazing. You should see the stuff crooks do with other people’s money.

Fortunately, these con artists are being apprehended and prosecuted. Federal, state, and local law enforcement officials have reported enormous increases in tips and criminal activity since the economic downturn began in 2008. As the markets began to flounder, people wanted out of their investments. However, cash redemptions are dangerous for Ponzi schemes, because when the money runs out, folks start talking. At any one time, enforcement staff at the US Commodity Futures Trading Commission (CFTC) are investigating anywhere between 750 and 1,000 individuals and entities for various violations of the law. Increases in tips and fraud cases also have occurred at the US Securities and Exchange Commission (SEC), at the Federal Bureau of Investigation (FBI), in the states, and in various localities around the world.

The stories you are about to read are actual CFTC cases stemming from investigations that began with the economic downturn. These are real cases with, unfortunately, very real victims. The information is pulled directly from the public case files and the media; the only added color is in the presentation and the benefit of hindsight. I’ve changed some names in order to ensure that no one is revictimized by their willingness to come forward and be a part of these cases. There is no shame in being a victim—it could have been, and might well be, any one of us. You’ll see that a majority of the defendants in these cases are now in prison or awaiting sentencing.

SEC—Federal agency that regulates securities and securities markets

FBI—Federal agency that investigates violations of federal criminal law

I’ve worked in public service for over a quarter of a century and have found that one of the most important things that can be done is to make government less puzzling and perplexing, less mysterious, and yes, less bureaucratic. While there has not been a monumental change in how people see their government over the years, I continue to try and do my part by communicating in a way that lets folks “in” on what is going on. This writing is an effort to continue that work. I hope it will be a satisfying read, but more importantly, that it will help people avoid the tremendous tragedy that so many of our fellow citizens have endured.