A Phoenix financial advisor who promised investors 100% monthly returns
with zero risk has pleaded guilty to running an unregistered commodities
pool investment scam.
According to federal authorities, Ray Thomas Brown, owner of Phoenix-based
Ray Brown & Associates, solicited investments in pool accounts that
purported to trade commodities, oil futures contracts, and currency. Brown
persuaded his victims to turn over large sums of money by claiming that
he was a wealthy retired banker who had a guaranteed method for earning
significant returns with little to no risk. In his marketing materials,
Brown identified the purported investments as “risk-free”
and/or “guaranteed.” He also promised investors returns of
between 30 and 100% per month.
In reality, however, Brown was an ex-convict with at least two fraud convictions.
Prosecutors said he never intended to invest the money as promised. Instead,
he took the vast majority of the $1.1 million he raised and spent it on
personal expenses and Ponzi payments to earlier investors.
Prosecutors filed wire fraud charges against Brown in March, just a few
months after the U.S. Commodity Futures Trading Commission (CFTC) accused
him of operating the fraud scheme. In its complaint against Brown, the
“Brown's written brochures for the Group Trading Program declare
to prospective participants: ‘YOU WILL BE GUARANTEED A 100% MONTHLY
RETURN.’ Contrary to this representation, Brown either lost participants'
funds in trading or misappropriated their funds for purposes unrelated
to trading. … The brochures also state that members of the Group
Trading Program would ‘enjoy the benefits of having a PROFESSIONAL
COMMODITIES trader executing the trades’ and that the ‘Group
Trader’– i.e. Brown – ‘utilizes technical and
fundamental analysis to forecast the direction of movement of market prices.’
Contrary to these statements, Brown has never been professionally employed
by any registered commodity firm handling the trading of customer accounts,
has never been registered in any capacity with the CFTC as a person authorized
to make trades on behalf of others, and failed to disclose to pool participants
and customers that he acting as an unregistered CPO [commodity pool operator]
and CTA [commodity trading advisor].”
Approximately 60 investors lost $1.1 million in Brown’s scam. For
additional information, read the
CFTC’s complaint against Brown here.
Investors who want to ensure they don’t fall prey to a scheme like
Brown’s, should read
“Want to Avoid Investment Fraud? Spend Time Choosing Your Adviser.”