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Richard Allen Spohr of Advantage Trading basically did the same thing. Here
is how his scam went. He sold stock in his company, Advantage Trading Group
to achieve Futures Commissions Merchant status to enjoy lower commissions on
the trades he executed for clients. He promised the investors that he would
split the difference in commissions. He took the 300,000 raised and
disappeared.
----- Original Message -----
From: <SLAWEKP@xxxxxxx>
To: <realtraders@xxxxxxxxxxxx>; <REALTRADERS@xxxxxxxxxxxxxx>
Sent: Monday, September 13, 1999 9:43 PM
Subject: re: Martin Armstrong & Princeton Economics
> MarketWatch/NewsAlert - StorySearch . Site Map . Feedback
>
>
> Investor Accused of $1B Fraud
> Associated Press Online - September 14, 1999 00:16
>
> By LARRY NEUMEISTER
> Associated Press Writer
>
> NEW YORK (AP) - Criminal and civil charges were filed against a New
> Jersey
> man accused of bilking Japanese investors out of up to $1 billion as
he
> tried to make up for losing hundreds of millions of dollars on risky
> investments, authorities say.
> Martin A. Armstrong, 50, of Maple Shade, N.J., was arrested Monday
and
> released on $5 million bail after an appearance in federal court in
> Trenton, N.J. A message left at a telephone listed in his name was
not
> immediately returned.
> Armstrong allegedly carried out his criminal scheme as the founder
and
> chairman of a Princeton, N.J.-based investment firm, Princeton
> Economics
> International Limited.
> Since at least 1996, Armstrong managed to sell about $3 billion of
> so-called "Princeton Notes" to foreign investors through Princeton
> Global
> Management Limited, a Princeton, N.J., investment fund he controlled
> that
> is popular with some large institutional investors in Japan,
> authorities
> said.
> The promissory notes were supposed to be conservative investments
but
> instead were used as fuel for Armstrong's failing investment
prowess,
> according to a portrait provided by court documents and releases.
> He was accused of securities fraud by federal prosecutors and the
> Securities and Exchange Commission for allegedly swindling investors
> through the corporations he controlled.
> Documents filed in U.S. District Court in Manhattan outlined the
scheme
> through which Armstrong allegedly tried to cover up hundreds of
> millions
> of dollars in losses he piled up through his risky trading.
> He promised to conservatively invest the proceeds from the note
sales
> in
> segregated accounts at Republic New York Securities Corp., a
registered
> broker-dealer headquartered in New York, authorities said.
> Instead of protecting the money, Armstrong co-mingled the money in a
> Princeton Global account at Republic, prosecutors said.
> After losing hundreds of millions of dollars, Armstrong then tried
to
> cover up the financial disaster by misrepresenting investment
results
> and
> concealing trading losses, according to court papers.
> The trouble began in earnest for Armstrong when he racked up about a
> half
> billion dollars worth of trading losses from November 1997 through
> August
> 1999, prosecutors said.
> He then allegedly had an officer at Republic Securities issue false
> confirmation letters, some of which were given to Japanese
investors,
> overstating the net asset values of the funds created by their
> investment.
>
> Federal authorities said the amount of the money from investors that
> has
> not been paid back stood between $700 million and $1 billion while
the
> remaining cash and trading positions at Republic Securities was only
> about
> $46 million.
> In a release, U.S. Attorney Mary Jo White noted that Armstrong used
> offshore entities to sell $3 billion in securities to Japanese
> investors.
> "This case should send a clear and concise message that those who
> commit
> securities fraud in the United States, even if they use offshore
> entities
> and victimize foreign investors, cannot escape responsibility for
their
> actions," she said.
> Besides the criminal and SEC civil charges, the U.S. Commodities and
> Futures Trading Commission filed civil charges against Armstrong,
> Princeton Economics International and various affiliates.
> If convicted, Armstrong faces up to 10 years in prison and a fine up
to
> twice the loss resulting from the crime.
> The SEC also filed civil charges against Princeton Economics
> International
> and Princeton Global Management.
> Republic recently suspended James E. Sweeney, its chief executive,
and
> replaced the management of its futures trading division.
> Republic New York is in the process of being acquired by HSBC
Holdings
> PLC
> of London for $10.3 billion, although the deal's closing could be
> slowed
> by the continuing investigation, executives have said.
> Headlines Next Story
>
>
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