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CFTC Wins Asset Freeze In $13M Churchgoer Ponzi Suit

CFTC Wins Asset Freeze In $13M Churchgoer Ponzi Suit

CFTC Wins Asset Freeze In $13M Churchgoer Ponzi Suit

CFTC Wins Asset Freeze In $13M Churchgoer Ponzi Suit

By Martin O’Sullivan of Law360.com

An Arizona federal judge issued an asset freeze Thursday against a man accused by the U.S. Commodity Futures Trading Commission of tricking Mormon church members into investing in a $13 million trading scheme that funded his personal expenses and Ponzi scheme payments.

In its May complaint, the CFTC says that Cory Williams, founder of Williams Advisory Group LLC, told at least 40 investors that they were earning a pretty penny while he traded futures contracts on their behalf, when he was actually using $3.4 million of their investments on Ponzi scheme payments and losing $8.3 million while trading for himself. In an order filed Thursday, U.S. District Judge John J. Tuchi issued an asset freeze against Williams in light of the CFTC’s evidence.

“The commission has presented evidence showing that … defendants fraudulently solicited at least $13 million from at least 40 members of the public,” Judge Tuchi said.

From April 2014 to December 2016, Williams solicited relatives, neighbors and members of the Mormon church to funnel their money into a pool, which he would then use to trade E-Mini S&P 500 futures contracts on their behalf, according to the suit. Williams passed himself off as an experienced and profitable trader and collectively reaped $13 million in participant funds, the CFTC says.

But in reality, Williams did not trade any of the money on behalf of the pool participants, the CFTC says; instead, he spent $1.3 million on dining, jewelry, vacations and charitable donations in his name. Almost $3.4 million of the funds were returned to investors in Ponzi-like payments, while the remaining cash was lost while Williams traded for his own benefit, the suit alleges.

“Williams lost money every single month he traded from April 2014 through and including December 2016, all the while falsely representing to participants that he was profitably trading on their behalf,” the commission says.

To pull off the scheme, Williams sent investors text messages with fabricated weekly profits, giving the impression that his trading was lucrative, according to the suit.

“In reality, pool participants accrued no profits and suffered total or near-total losses of their deposits,” the CFTC says.

What’s more, investor money was commingled with the personal funds of Williams and his wife, according to the complaint. The $13 million was deposited directly into Williams’ personal bank accounts, and no separate pool was ever created, the commission says.

The CFTC did not immediately respond to a comment request Friday.

The CFTC is represented in-house by Danielle E. Karst and Timothy J. Mulreany.

Counsel and contact information for Williams was not immediately available.

The case is U.S. Commodity Futures Trading Commission v. Williams et al., case number 2:17-cv-01325, in the U.S. District Court for the District of Arizona.

Source: Law360.com

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The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.