The U.S. Securities & Exchange Commission (SEC) has accused a man of defrauding investors of approximately $1.7 million in a FOREX Ponzi Scheme. Before fleeing the country, he promised investors that his computer program would generate high rates of return on foreign exchange trades. Instead of investing in the computer program as promised, his investments were used to make Ponzi-style payments and fund lavish shopping sprees.
Forex Ponzi Scheme Leads to Losses for Investors
Steve Karroum took investor money and routed it through his company, FX & Beyond Corp., to pay off earlier investors – a hallmark of a Ponzi scheme. Karroum used at least $80,000 to make personal purchases.
From 2007 to 2014, Karroum solicited nearly $4 million from investors, claiming his program could generate up to 30 percent returns for investors without risk of loss. He guaranteed profits and the return of their principal.
At some point in 2010, Karroum stopped using the money to invest in forex trading, even though he still sought funds for his program for another four years. While representing that investor money was going to his forex broker, less than half actually made it there. At least 14 investors lost a total of $1.7 million.
In order to hide his scam, Karroum provided false account statements reflecting “profits” earned from forex trading; but the purported profits were actually newer investors’ funds that were used to pay “investment returns” to earlier investors. Karroum’s wife received $335,000 from FX & Beyond’s bank account to pay off credit card bills and make mortgage payments on four condominiums.
Karroum fled to Lebanon in 2015. The SEC is seeking to enforce a subpoena against Karroum and his company, saying that he and FX held back documents that would prove the SEC’s case.
Did you unknowingly invest in the Forex Ponzi Scheme?
If you invested with Steve Karroum or FX & Beyond, you may have certain legal rights that require your immediate attention.
Call a Los Angeles Forex Attorney Today
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