Oxford Global Partners and Universal Brokerage Ponzi Scheme Case: The Returns Came From the Calculator

In the Oxford Global Partners and Universal Brokerage Ponzi scheme case, the Securities and Exchange Commission alleged that a foreign currency investment program paid investors with other investors’ money while claiming their accounts earned steady trading profits. The complaint reaches inside the office that produced those profits on paper. If you prepared statements, repeated the sales pitch or moved customer deposits, the difference between what investors were told and what the accounts actually showed may be familiar.

Oxford’s story turns on the people preparing the statements, the company named on the bank account and the warnings that never reached investors. Our broader coverage of forex, futures and trading Ponzi schemes follows the same source-of-payment question across different trading pitches.

Oxford and Universal Sold the Same Currency Program

Oxford Global Partners, Oxford Global Advisors, Universal Brokerage FX Management and UBS Diversified Growth were vehicles for selling interests in the Currency Program, according to the Securities and Exchange Commission’s complaint. The Oxford Private Client Group was a separate registered investment advisory firm whose principal and agents brought clients into that program. Investors signed agreements with the offering companies while relying on the adviser recommending the investment.

The names helped sell continuity and credibility. The Securities and Exchange Commission alleged that the adviser shifted fundraising from the Universal offerings to the Oxford offerings after UBS AG brought a trademark lawsuit. The agency’s earlier announcement expressly stated that the companies using the UBS name had no affiliation with the Swiss financial services firm.

The pitch promised annual returns of 10.5% to 12%, little or no risk, separate investor accounts and access to the money whenever investors wanted it. According to the complaint, sales materials described offsetting currency positions that would capture differences in interest rates while eliminating currency risk. The money was supposed to earn an interest-rate spread, safely, while remaining available to withdraw.

The Securities and Exchange Commission alleged that the sales operation also supplied the statements investors relied on to judge performance. The apparent confirmation came from the people selling the promise.

Returns Calculated From the Promise

The Securities and Exchange Commission alleged that an Oxford Private Client Group employee calculated supposed profits by multiplying each investment by the promised return. The firm’s principal directed the preparation of the statements and personally changed drafts. The calculation used the sales promise as its input:

The statements also displayed individual account numbers, which the complaint alleged gave investors the false impression that their money was held separately. In fact, the complaint alleged, the money was pooled in bank and trading accounts bearing the Universal and Oxford companies’ names. We see two promises kept on paper. The accounts kept neither.

For someone who works on client reporting, the source of the profit figure is the important detail. A statement template, the instructions used to fill it and the underlying trading results can explain how the customer-facing number came into existence. In the complaint’s account, the trades could lose. The formula never did.

Swiss Custody, Minnesota Bank Account

The promised move to a Swiss custodian changed the name investors saw without delivering the custody arrangement they were sold. The Securities and Exchange Commission alleged that investors were told Crown Forex, S.A. in Switzerland would hold their funds, while Oxford Global Advisors continued managing the trading. Investors completed account-opening applications and were instructed to make checks payable to Crown or Crown Forex.

According to the complaint, those deposits instead went into a Minneapolis bank account for Crown Forex, LLC, a shell company. The Swiss trading firm and the American account used nearly identical names. Online statements then purported to show segregated Swiss accounts earning daily profits, with no trading losses.

The Commodity Futures Trading Commission’s complaint isolated approximately $80 million deposited into that domestic Crown Forex account. It alleged that none of the money deposited in that account went to Crown Forex, S.A. as represented.

The CFTC also alleged that the program’s organizer directed withdrawals and deposits in accounts on which he was not a signatory, and signed another operator’s name on checks and withdrawal slips. For an operations employee, account ownership and authority to move money are distinct parts of the story. The account title, signature authority and actual transfer instructions can show who controlled funds sold as individually protected investments.

Where the Currency Program Money Went

The Securities and Exchange Commission’s March 2011 complaint alleged that the Currency Program raised at least $194 million, but only $109 million reached brokerage accounts where foreign currency trading occurred. The complaint put the net trading loss at approximately $68.3 million. It alleged that approximately $52 million from money never deposited with brokerage firms and money returned from those firms went toward purported returns and principal payments to investors. A check could arrive even while trading lost money because investor capital supplied the payment.

The source-of-payment substitution also appears in the Securities and Exchange Commission’s Woodbridge allegations. There, returns supposedly came from independent borrowers, but the agency alleged that most borrowers were controlled by the organizer and lacked the income to pay. New investor money funded earlier investors. Different investment story, same question for the person who sees the outgoing payment: which incoming money funded it?

How Many Investors Did the Currency Program Reach?

The Securities and Exchange Commission’s November 2009 announcement described at least $190 million raised from more than 1,000 investors across the scheme. Its later action against Oxford Private Client Group focused on that adviser’s fundraising: at least $47.3 million from at least 143 investors between August 2006 and July 2009. The complaint said those investors received approximately $8.2 million in purported interest or returned principal and suffered losses of at least $39.1 million.

Oxford Private Client Group solicited investors in numerous states while sharing offices with the program’s staff in Minneapolis. The Justice Department’s account of the criminal trial evidence described the wider sales operation’s telemarketing, media spots and seminars. A promoter’s radio show, carried on more than 200 stations, warned listeners to avoid financial ruin by giving their life savings to his company for investment.

Warnings Stayed Inside the Sales Operation

The Commodity Futures Trading Commission alleged that Swiss regulators placed Crown Forex, S.A. into receivership in December 2008 and bankruptcy liquidation on May 19, 2009. The operators kept soliciting and accepting investor funds until at least July 2009 for accounts supposedly held there. The complaint alleged that they knew about the Swiss investigation and restrictions but continued presenting the firm as financially sound.

The Securities and Exchange Commission alleged that an outside accounting firm could not complete its review because it could not reconcile the Currency Program’s statements with bank and trading records. The adviser nevertheless told a prospective investor that the program had been reviewed, suggesting it had passed independent scrutiny. The unfinished review became a sales credential.

The complaint also quoted an internal reaction when a broker-dealer’s chief executive asked about a Currency Program promotion on the adviser’s website. The adviser’s principal forwarded the inquiry to the program’s organizer with this message:

The organizer’s response, as quoted in the complaint, proposed blaming a fired trainee sales representative and saying the trainee’s work had never been approved. The complaint alleged that fundraising continued. For a sales or compliance insider, the revealing comparison is between the questions management received, the answers it circulated internally and the pitch it continued giving customers.

What the Criminal Trial Added

The Justice Department’s account of the criminal trial evidence said the program’s individual operators and promoters falsely described its safety, performance and liquidity. It described statements and return checks produced by the co-conspirators to reassure investors and encourage further investments, while most investors received nothing from the actual custodians. It also said the participants concealed trading losses and the Swiss trading firm’s dire financial condition while continuing to solicit funds.

The Securities and Exchange Commission reported obtaining asset freezes and a receiver over the original operation’s assets, then over assets in the Oxford Private Client Group action. The receiver’s work tracing and controlling assets concerns the money available for recovery. The trial account explains how the investment story deceived customers.

What Evidence Is Needed for Whistleblowing?

The useful evidence connects the sales promise to the accounts, statements and decisions behind it. In Oxford, that means the separate-account claim beside the pooled deposits, the Swiss custodian named in the application beside the domestic account receiving the check, and the reported profit beside the calculation that produced it. The complaint also makes internal warnings part of that comparison: what management knew while the sales operation kept accepting money.

The 2018 study The Significance of Whistleblowing as an Anti-Fraud Measure, published in the Journal of Forensic & Investigative Accounting, found whistleblowing was the most common detection method in its occupational-fraud sample. It also found that whistleblower detection became more likely as more people participated in the fraud. For us, the practical connection is the different views inside an investment business: an employee who knows how a statement was prepared may explain something the finished statement conceals.

An eligible SEC whistleblower award can be 10% to 30% of qualifying sanctions collected when the action exceeds $1 million in sanctions. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Our experts assess the applicable whistleblower program with you.

You Know How the Returns Were Made

If the client statements showed profits you could not find in the trading accounts, tell our whistleblower experts what went into those statements. We work with you to build the case around the money, the representations and the decisions you witnessed, and bring in securities and commodities fraud whistleblower lawyers who understand the trading operation. You get an experienced partner from the first account discrepancy through the pursuit of your whistleblower case.