With millions of dollars swindled from Hawaii residents in recent years, the Honolulu office of the Federal Bureau of Investigation is warning isle residents to beware of a fraudulent activity known as platform trading.
"These scams have been around for a long time, but we have seen a surge in these fictitious investments here in Hawaii over the past few years," FBI Special Agent Tom Simon said.
In these schemes, perpetrators falsely represent their ability to offer above-average market returns with below-market risk through the trading of bank instruments. Offering such programs, or claiming connections to such programs, violates a slew of federal laws, according to FBI officials.
Simon said more than $3 million in losses has been racked up in the past few years among Hawaii victims of such schemes, also known as private platform programs, prime bank trading or medium-term note trading programs.
"Most of the local residents who get mixed up in these scams learn about them on the Internet. Unfortunately, there are more offers for these fake opportunities on the Web than there are law enforcement warnings about them," Simon said. "Unlike stocks, bonds or commodities, there is simply no such thing as a platform trading program. You might as well invest your money in unicorns."
The Honolulu FBI office has investigated several recent schemes, including the case of Curtis Wayne Ross, who is accused of defrauding more than $167,000 from four people in Hawaii, offering alleged bogus investments in international diamond and gold transactions and renewable energy industries. Ross, who purported to be a multimillionaire and United Nations ambassador, is expected to stand trial in Honolulu later this year.
In another case, David Buchanan, 47, was sentenced in August to two years in jail and ordered to repay his victims. Among other things, Buchanan admitted to scamming his Molokai neighbor, a retired federal employee, out of $45,000 by promising her he would turn her investment in his fictional Molokai’s Finest business into $300,000.
Instead of investing the money, Buchanan spent it on personal travel, on an online video game and on an Internet girlfriend in the Philippines through Western Union wire transfers. He also spent the money on online shopping, credit card payments and other personal expenses.
FBI officials have noted several common characteristics to platform trading schemes, including claims that:
» Investor funds can be placed in a bank account and then used, without risk, to trade bank debentures, or other financial instruments.
» Invested funds can be used to lease or rent U.S. Treasury obligations and then use these same leased securities as collateral for further trading programs.
» Trading medium-term notes, prime bank notes or any other bank instruments on a riskless basis will yield above-market returns.
» Letters of credit can be discounted or traded for profits.
» Certain high-yield foreign trading programs are sanctioned or supported by the Federal Reserve, International Monetary Fund or other U.S. and international agencies.
"Any time someone offers you a high-yield investment coupled with low risk, you should grab your wallet and run the other way. There’s no such thing in the real world," Simon said.
Anyone with information about people offering these kinds of scams should contact the FBI at 566-4300.
