By Malia Zimmerman – HONOLULU – Curtis Wayne Ross was indicted this fall for allegedly defrauding three victims of $186,000, and he was re-indicted after being caught red handed in an FBI sting attempting to scam the Little Angels children’s charity out of $15 million.
Court records show Ross promised the manager of Little Angels he’d generate up to a 70 percent return within 120 days on the $15 million through a “platform trading program.”
Ross is awaiting trial later this year, but his case, and a series of others, have the FBI in Honolulu on high alert.
“Hawaii residents who fall victim to these scams are often seeking financing for large projects that local banks aren’t willing to touch. The would-be entrepreneurs turn to the Internet looking for unconventional financing opportunities. Instead, they find con-men in the world of these fictitious trading platforms. The prospect of turning a few hundred thousand dollars into several million can be very alluring desperate people in need of capital,” said FBI Special Agent Tom Simon.
Ross’ case follows closely behind that of David “Kawika” Buchanan, a Molokai resident sentenced Aug. 25 to 24 months in federal prison after taking $40,000 from his neighbor on the promise of a 600 percent return.
Court records show Buchanan used his victim’s money to purchase a subscription for the online video game Evony, which features virtual scantily clad women who call on their “lovers” or their “lords” to “build their empire” and “rule the world.” He also subsidized the lifestyle of his real online girlfriend in the Philippines.
Previously Buchanan was convicted for stealing millions of dollars from acquaintances in Washington State and using their money to purchase a Jaguar automobile, expensive jewelry, gifts and real estate.
Such scams have been around for a long time, Simon said, but the FBI has seen a surge in these fictitious investments in Hawaii over the past few years.
“Unfortunately, there are more offers for these fake opportunities on the web than there are law enforcement warnings about them,” Simon said.
“Any time someone offers you a high yield investment coupled with low risk, you should grab your wallet and run the other way. There’s no such thing in the real world,” Simon said.
FBI Special Agent-in-Charge of the Honolulu Office Paul Delacourt issued a notice Monday about the increase in fraudulent activity commonly referred to as “Platform Trading, Private Platform Programs (PPPs), Prime Bank Trading, or Medium-Term Note Trading Programs.”
These perpetrators violate a number of federal laws when they falsely represent their ability to offer above-average market returns with below-market risk through the trading of bank instruments, Delacourt’s memo said.
“Red flags” include claims that:
- “Investor funds will be placed in a bank account and used, without risk, to trade bank debentures, or other financial instruments;
- “Invested funds can be used to lease or rent U.S. Treasury Obligations and then use these same leased securities as collateral for further trading programs;
- “Trading Medium Term Notes (“MTN’s”), Prime Bank Notes, or any other bank instruments, on a riskless basis, will yield above market returns;
- “Letters of Credit or Standby Letters of Credit can be discounted or traded for profits;
- “Certain high-yield foreign trading programs are sanctioned or supported by the Federal Reserve, International Monetary Fund, International Chamber of Commerce, or other U.S. or international agencies;
- “Special connections to the Federal Reserve or some other internationally renowned organization such as the United Nations, the IMF or the World Bank or ties to benevolent, humanitarian or charitable projects.”
Other warning signs include the perpetrator’s request for extreme secrecy and nondisclosure agreements or claims that the “investment opportunities” are by invitation only, available to only a handful of customers or for wealthy elite. Con men also have told their victims the deal is too complicated to understand.
“Unlike stocks, bonds, or commodities, there are simply no such things as platform trading programs. They simply don’t exist. They are an urban legend that con-men use to steal money from financially unsophisticated investors,” Simon said.