Commodities Trader Indicted For $300,000 Ponzi Scheme
Defendant Solicited Investors By Falsely Promising Profits of Up To 10% Each Week
Earlier today, a 28-count federal indictment was unsealed in federal court in Brooklyn charging Jeffrey Shalhoub with operating a Ponzi scheme to defraud investors in his unregistered commodities trading pool.1 The indictment alleges that Shalhoub solicited his alleged victims to invest money in his company, The 9 Group, Ltd., which purportedly pooled investor money and used the money to trade in the commodities futures markets. Shalhoub told his investors that they would receive returns of up to 10% of their principal investment every week through his investments in commodities futures. The indictment charges that after he solicited approximately $300,000 of investor money, Shalhoub lost a substantial sum of this money through his trading activities, and misappropriated much of the remaining funds by keeping the money for himself. The defendant allegedly concealed the theft and losses by sending his investors fraudulent account statements which falsely showed that his investors’ accounts were earning a rate of return of up to 5.2% each week. The indictment further alleges that because of his trading losses and theft of investor funds, Shalhoub could not pay his existing investors their expected investment returns and, therefore, had to use new investor money to pay purported earnings to the existing investors.
Shalhoub was arrested earlier today. He will be arraigned in United States District Court for the Eastern District of New York before United States Magistrate Judge Robert M. Levy. The case has been assigned to United States District Judge Sterling Johnson, Jr.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service.
“As alleged in the indictment, Shalhoub employed fraud and deceit to take advantage of victims who sought to invest in America’s markets. His promises of high returns were all a criminal mirage, propped up by account statements that were no more than fairy tales,” stated United States Attorney Lynch. “Today’s arrest demonstrates the Department of Justice’s continuing commitment to investigate and prosecute those who commit financial crimes, particularly those who haven’t gotten the message that we will not tolerate Ponzi schemes.” Ms. Lynch thanked the United States Postal Inspection Service for its work on the investigation and also acknowledged the Commodities Futures Trading Commission for its assistance.
The government’s case is being prosecuted by Assistant United States Attorneys Tyler Smith, David C. Woll, Jr., and Brendan G. King.
This prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.
Residence: Staten Island, NY
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