U.S. Attorney Charges Chubbuck Man with Wire Fraud
BOISE – Brad Lee Demuzio, 35, of Chubbuck, Idaho, was indicted on April 10, 2012, by a federal grand jury in Boise on five counts of wire fraud, U.S. Attorney Wendy J. Olson announced.
According to the indictment, Demuzio established Demuzio Capital Management, LLC (“DCM”), to solicit capital from investors and use the capital to trade on the foreign currency markets. Demuzio executed partnership agreements between DCM and individual investors. Therein, Demuzio pledged to match any capital contributions made by the investors, invest the pooled capital in the foreign currency markets, and share equally in the profits and losses. Demuzio entered into partnership agreements with approximately 16 investors. From these investors, Demuzio is alleged to have obtained approximately $1.85 million in capital contributions.
However, according to the indictment, of the approximate $1.85 million in investors’ capital contributions, Demuzio allegedly invested only a small percentage in the foreign currency markets, and contrary to the partnership agreements, did not invest equal amounts of DCM funds. Rather, he used a large portion of the investors’ capital contributions to pay personal expenses, including but not limited to, personal mortgage payments, retail purchases, and personal loans.
According to the indictment, Demuzio allegedly made false statements to investors about the status of their capital contributions. In weekly emails, he represented to investors that their “investments” were generating positive returns. In fact, Demuzio either had not invested their capital contributions at all or lost the portion of the capital contributions that he did invest. In addition, the indictment alleges that Demuzio periodically distributed “profits” to investors. In reality, the distributions were not profits at all, but were funded by the capital contributions of new investors (or the investors’ own capital contributions). Likewise, Demuzio allegedly falsified letters and provided them to investors. In 2011, when two investors requested that Demuzio return their capital contributions, Demuzio claimed that he was under investigation by the U.S. Commodity Futures Trading Commission (“CFTC”), was cooperating with the investigation, but could not return the investors’ funds because the CFTC had frozen his assets. In support, Demuzio allegedly provided the investors with two forged letters, purportedly bearing the seal of the CFTC and the signature of the General Counsel of the CFTC.
The indictment contains a forfeiture allegation seeking approximately $963,105, or substitute assets, including property, valued at this amount.
Each count of wire fraud is punishable by up to 20 years in prison, a maximum fine of $250,000 or twice the gain or loss from the offense, and up to three years of supervised release.
The case was investigated by the Federal Bureau of Investigation and the CFTC.
In a related civil case, the U.S. Commodity Futures Trading Commission filed a complaint in United States District Court in Boise yesterday charging Demuzio and his company, Demuzio Capital Management, LLC, with operating a fraudulent $1.8 million commodity pool and foreign currency Ponzi scheme.
An indictment is a means of charging a person with criminal activity. It is not evidence. The person is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
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