How Not to Triple Your Money in Two Weeks
by Paul Springer
The Bernard Madoff scandal induced many people to question questionable return claims. But there are still at least some folks out there who’ll believe anything – like the promise of a 300% return in only two weeks.
It’s the old prime bank scheme in action – an investment scheme based on the claim that investors can pare off a percentage of transactions among huge banks.
According to a Securities and Exchange Commission legal action, Atlanta-based attorney Michael Rothenberg, through his firm Four Five, promised investors the 300% short-term return, claiming that the two-week round trip could be taken again.
While the alleged scam is tiny compared to the Madoff debacle, the return figures dwarf most of the preposterous claims made by fraudsters.
How could such returns be achieved? That, of course, was a secret:
[The commission] alleges that between at least February 2010 and March 2010, Rothenberg, through Four Five, used misrepresentations and omissions of material fact to induce investors to participate in a secret and allegedly risk-free trading platform or trading facility. This trading platform or trading facility purportedly involved transactions among international banks that would generate substantial return on a recurring basis.
What could possibly go wrong with that scenario? Only this:
Contrary to Defendants’ representations, a risk-free trading process providing the returns promised by Defendants does not exist.
Although $900,000 was returned to investors, another $800,000 was squandered – and not just on the typical stuff, the SEC said.
Rothenberg waged an unsuccessful campaign to join the DeKalb County Superior Court, according to the SEC’s complaint. He previously served on the county Recorder’s Court in 2007 and 2008.
The commission on Friday announced a settlement in which Rothenberg does not deny allegations such as this one:
Between March 2010 and October 2010, at least $210,000 in investor funds were transferred to a bank account designated for contributions to Rothenberg’s judicial election campaign.
So Rothenberg’s plan did succeed in one respect: He did get to spend a lot of time in court.
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