Malibu Man Arrested In Ponzi Scheme
A Malibu man arrested in an alleged $15 million Ponzi-like scheme that financed a lavish lifestyle that included private jets and the production of a movie starring Busta Rhymes is scheduled to make his initial appearance in a Los Angeles federal courtroom today.
Charles G. Martin, 43, was arrested late Tuesday in Los Angeles, federal agents said. A second defendant, John E. Walsh, 60, of Glencoe, Ill., was picked up in the Chicago area today, the U.S. Attorney's Office said.
Both men were charged with one count each of wire fraud in a federal criminal complaint filed Tuesday and unsealed today, officials said.
Martin, who has a Malibu address, and Walsh were allegedly principals of a Winnetka- and New York-based firm called One World that purportedly specialized in trading foreign currency, prosecutors said.
According to the complaint, beginning no later than April 2006 through December 2007, the two men engaged in a scam to obtain One World customer funds earmarked for over-the-counter foreign currency trades -- called "forex" -- for their own use and to finance lavish lifestyles, including helping finance a movie that was never released.
A former One World employee, according to court papers, told investigators that Martin "spent money like a billionaire." Credit card and bank statements show he spent more than $1 million at a strip club and restaurants, nearly $1 million at elite hotels and another $1 million renting private jets, officials said.
Martin bought a fleet of luxury cars, donated hundreds of thousands of dollars to celebrity charity events and hired security guards to accompany him in public, according to the allegations. Similarly, Walsh allegedly used his One World credit card to charge personal expenses, including more than $140,000 in jewelry, papers show.
Prosecutors said One World clients lost about $15 million, but the criminal complaint did not specify the number of customers or other potential victims in the case. Federal agents executed multiple search and seizure warrants today, including warrants to search homes owned by Martin and Walsh in the Chicago area, as well as bank safety deposit boxes issued to the men, prosecutors said.
In addition to the luxury items, bank records show Martin and Walsh spent more than $569,000 diverted from One World to help finance the production of "Order of Redemption," an unreleased action film starring Rhymes, Tom Berenger and Armand Assante. Martin is listed as a contributing producer, officials said.
Prosecutors said the scheme operated when One World, acting as a foreign currency dealer, accepted funds for over-the-counter transactions but allegedly diverted secured client funds for Martin and Walsh's own uses.
Like all Ponzi schemes, the plot unraveled when customer redemption requests could not be honored because the money was gone, officials said. An audit by the National Futures Association confirmed the worst.
Martin is due to make his initial court appearance today in U.S. District Court in Los Angeles. Walsh was expected to appear before a federal judge in Chicago this afternoon.
Wire fraud carries a maximum penalty of 20 years in federal prison and a $250,000 fine upon conviction.
http://cbs2.com/consumer/Malibu.Man.Arrested.2.902443.html
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http://www.nfa.futures.org/news/newsRel.asp?ArticleID=2221
NFA permanently bars Illinois forex firm, One World Capital Group LLC and its principal
January 5, Chicago - National Futures Association (NFA) has permanently barred One World Capital Group LLC (One World) and its principal, John E. Walsh from NFA membership. One World is a Futures Commission Merchant and Forex Dealer Member located in Winnetka, Illinois. The Decision, issued by NFA's Business Conduct Committee, is based on a Complaint filed in September 2008.
The Committee found that One World and Walsh failed to cooperate with NFA in an investigation of One World's activities, provided false and misleading information to NFA and failed to supervise its preparation and maintenance of books and records. Additionally, the Committee found that One World failed to maintain required minimum adjusted net capital and failed to maintain books and records.
The Decision is one of a series of actions taken against One World and Walsh. In June 2007, the Committee issued a Complaint against One World and Walsh charging them with various violations, including failure to meet minimum adjust net capital requirements and maintain adequate books and records. Although One World settled the Complaint by agreeing to pay a fine of $100,000 and an additional fine of $50,000 unless certain conditions were met, One World has not made any payments to date. See previous press release.
Additionally, NFA issued a Member Responsibility Action (MRA) against One World and Walsh in November 2007 based, in part, on complaints received by One World's forex customers. The MRA charged that One World and Walsh had failed to demonstrate that One World had sufficient capital to comply with its minimum net capital requirement and discharge its liabilities to customers. See previous press release.
In December 2007, the Commodity Futures Trading Commission (CFTC) also filed an action against One World and Walsh in federal court in Chicago charging them with failing to demonstrate compliance with capital requirements and failing to maintain required books and records. The Court entered a temporary restraining order against One World which froze One World's assets, prohibited One World and Walsh from destroying books and records and ordered the firm to cease doing business.
