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U.S. Commodity Futures Trading Commission inquiry eventually leads to ponzi scheme indictment August 12, 2009

Posted by jefhenningeresq in News.
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This is a very interesting case because an investigation into Paul Robert Karr’s activity started in 2004 but he was just indicted now.  I’d really like to know what took so long here.  How does it take 5 years to put this together?  Hopefully Karr used his time wisely and has prepared for his defense over the years. 

The only good thing about all of these ponzi schemes at this point is that a defense attorney can keep track of all of the sentences that are starting to go down so that they can advise their client accordingly.  Of course, the bad thing though is taking these cases to trial is very difficult for many reasons, the least of which is the public’s attitude on these cases.

Jeffrey H. Sloman, Acting United States Attorney for the Southern District of Florida, and Michael J. Folmar, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced today that Paul Robert Karr, f/k/a Paolo Roberto Correa (“Karr”), a North Miami Beach resident, was arrested earlier today on mail and wire fraud charges arising from an investment fraud scheme in which more than 100 investors lost approximately $4,000,000. Karr is currently being held without bond. A pre-trial detention hearing is scheduled for Friday, August 14, 2009 at 10:00 AM, before the duty Magistrate Judge.

As alleged in the Indictment, from January 2002 through November 2004, Karr defrauded investors by soliciting investments for the purported purpose of trading foreign currencies in the international foreign exchange market. Karr caused investors to believe that, based on his alleged extensive experience trading foreign currencies, he would trade foreign currencies on the investors’ behalf in return for a share of the profits generated by his trading activities. Investors were led to believe that Karr was generating positive monthly returns trading foreign currencies each and every month during the course of the scheme. In fact, during most of the scheme’s existence, Karr did not even attempt to trade foreign currencies, and, when he did attempt to do so, he lost significant amounts of investors’ money.

As the Indictment alleges, Karr used most of the investors’ money for his own personal benefit and to make payments in Ponzi scheme fashion to investors who occasionally sought to redeem some of the money that they had invested with Karr and his various corporate entities. In October/November 2004, the scheme collapsed after Karr received inquiries from the U.S. Commodity Futures Trading Commission (“CFTC”) concerning his activities in the international foreign exchange market.

Mr. Sloman commended the investigative efforts of the FBI and the assistance of the staff of the CFTC’s Chicago Office. The criminal case is being prosecuted by Assistant U.S. Attorney Harold E. Schimkat.

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