Two Grand Prairie brothers are accused of running a $5.5 million Ponzi scheme that took money from 99 investors, many of them members of the brothers' church, court documents show.
Rodney and Roger Wagner told investors their trading was so successful that they made returns of 6 percent per day, according to a federal civil complaint filed this week by the U.S. Commodity Futures Trading Commission.
Their company, GID Group, obtained customers through the Wagners' direct solicitations and through word of mouth. In the solicitations, the brothers represented to actual and prospective customers that their funds would be used to trade off-exchange foreign currency contracts, according to federal documents.
The Wagners generally solicited members of their church and the members' relatives, friends and acquaintances. They are accused of misappropriating about $657,000 in GID customer funds, according to the federal complaint. About $67,000 went for payments to themselves and another entity they co-owned, as well as debit card purchases at restaurants, gas stations, retail stores and utilities, according to the complaint.
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Neither of the brothers could be reached for comment. The telephone number for GID is apparently disconnected. The company does not have an attorney listed in federal documents.
To conceal and perpetuate the fraud, the Wagners made weekly payouts of "returns" knowing that GID had lost money in their limited foreign exchange trades, according to the complaint. In a Ponzi scheme, money from new investors is used to pay earlier investors, creating the appearance that an investment is generating a profit.
This week, a federal judge entered a restraining order freezing the assets of GID Group and of the Wagners, as well as prohibiting the destruction of any books and records.
The commission's complaint says that from about February 2010 through November 2010, the Wagner brothers fraudulently solicited money for the purpose of participating in a pooled investment vehicle trading in off-exchange agreements, contracts or transactions in foreign exchange markets on a leveraged or margined basis.
Instead, the complaint says that only a small portion of GID customer funds were deposited into the Wagners' forex trading accounts and that these accounts sustained net losses.
The complaint also accuses the brothers of providing actual and prospective GID customers with payout schedules that "falsely promised returns of at least 200 percent and made explicit statements during face-to-face meetings that they had been successfully trading forex for two to three years and earning 6 percent per day," according to the commission.
Darren Barbee, 817-390-7126