FindLaw | Legal News & Information

Foreign-Currency Trader Faces Criminal Charges for $7 Million Fraud

A California foreign-currency exchange trader allegedly bilked investors of more than $7 million and then sent an e-mail to his victims apologizing for his "shameful conduct."

"I feel like I'm a financial serial killer," forex trader Joel Nathan Ward allegedly also wrote in a personal journal that was later turned over to the FBI. "I hate the fact that I am just another scumbag con artist bilking old people out of their retirement money."

Ward is charged in Sacramento federal court with five counts of mail fraud and two counts each of wire fraud and money laundering for operating an alleged forex scheme from 2003 to 2006 that defrauded 92 investors.

Their losses exceeded $7 million, according to an FBI affidavit filed with the U.S. District Court for the Eastern District of California.

"Ward used his self-proclaimed expertise in currency trading to steal millions of dollars from family, friends, employees and other investors," Sacramento U.S. Attorney McGregor W. Scott said in a statement.

According to the affidavit, Ward offered investors up to a 40 percent annual return on their money, but his Joel Nathan Forex Investment Group failed to generate trading profits on foreign-currency options or futures contracts.

Instead, he allegedly operated a Ponzi scheme using money from new investors to make false trading-profit returns known as "lulling payments" to existing investors.

A criminal indictment filed in the District Court says he backed up the lulling payments with fictitious investor financial reports, including a faked Merrill Lynch account statement that showed Ward's JNF investment group had more than $9 million on deposit.

The scheme fell apart last August when one of his banks, Washington Mutual Bank, told the FBI that Ward might be operating a Ponzi scheme, according to the affidavit.

An audit of his four Washington Mutual accounts showed numerous wire transfers between the United States and foreign countries such as the Dominican Republic and Australia.

"Additionally, there were numerous bank withdrawals, averaging a few thousand dollars each, payable to various individuals," the affidavit said. "[B]ased on the information gathered to date, these constitute lulling payments to investors."

Three months later Ward allegedly confessed in an e-mail to investors that he had stolen all their money.

"There are no funds left in JNF as all monies have been misappropriated," he allegedly wrote. "I sincerely apologize for this shameful conduct."

Federal prosecutors said Ward faces a lengthy prison term - the wire fraud charges alone carry maximum 20-year sentences - and more than $1 million in criminal fines.