International Law

Directors Financial Group Prime Bank Fraud

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I am fascinated as to why the Prime Bank scheme continues to work, given the amount of public information out there.

From the SEC Press Release on Directors Financial Group Prime Bank fraud: "The Securities and Exchange Commission (the "Commission") announced today that on September 29, 2008, it filed a civil action in the U.S. District Court for the Northern District of Illinois, charging David Myatt and William Eichengreen with violating the antifraud provisions of federal securities law based on their conduct involving a now-defunct hedge fund, Directors Performance Fund, LLC (the "Fund").

The Commission's Complaint alleges that Myatt defrauded the Fund by convincing Directors Financial Group, Ltd. ("DFG") -- the Fund's investment adviser and managing member -- to invest $25 million in a fraudulent "prime bank" scheme.

The Complaint alleges that, among other misrepresentations, Myatt falsely claimed that: He was an associate with American Trade Industries, Inc. ("ATI") which purportedly held over $60 million in assets which he used to "assist the global financial markets and social well-being of others".

ATI's President, Richard Warren, ran a trading program that transacted in unidentified discounted fixed-income instruments (the "ATI Program"). The ATI Program would earn a return in excess of 10% per month with no risk to invested principal.

The ATI Program occurred on a secret market overseen by "the Fed"; and Warren was one of the few traders licensed by "the Fed" to trade on that secret market.

In reality, the ATI Program was a sham designed to defraud investors.

No trades ever took place and no profits were actually generated.

Such "something-for-nothing" trading programs are entirely fictional.

Moreover, the Federal Reserve does not oversee any such trading programs or license any individuals to conduct such trading."

Now, how can we get people to recognize that something for nothing trades are inherently fraudulent? Any ideas?

Full post as published by Misleading Advertising Law on October 01, 2008 (boomark / email).