Florida Man Pleads Guilty To Conspiring To Defraud InvestorsOver 100 Investors Lost More Than $11 Million
ORLANDO, FLA. - Damien L. Bromfield, 37, of Ocoee, Fla., pled guilty today to a federal charge stemming from his role in an investment fraud scheme in which more than 100 investors lost over $11 million, announced U.S. Attorney Ronald C. Machen Jr. and James D. Robnett, Special Agent in Charge of the Tampa Field Office of IRS- Criminal Investigation.
Bromfield pled guilty in the U.S. District Court for the Middle District of Florida to a charge of conspiracy to commit wire fraud. No sentencing date was set.
The conspiracy charge carries a maximum of 20 years imprisonment and financial penalties. The parties agreed that, under the federal sentencing guidelines, Bromfield faces a range of between 78 and 188 months in prison and a fine of between $12,500 and $175,000. He also will be required to pay restitution to the investors of between $6,752,000 and $8,541,102.
“This defendant used fraud and deception to trick more than 100 people into investing in a fund they believed was financially sound,” said U.S. Attorney Machen. “His conduct led to millions in losses and now he himself is paying the price with a criminal prosecution. This case demonstrates the resolve of law enforcement to hold fraudsters accountable for carrying out such investment schemes.”
“Illegal activity involving the investment industry has brought financial ruin to many Americans,” said Special Agent in Charge Robnett. “IRS Criminal Investigation, along with our law enforcement partners, will vigorously pursue corporate officers who victimize their investors and violate the public trust.”
According to facts presented to the Court by Assistant U.S. Attorney Ephraim (Fry) Wernick, who is designated to prosecute the case as a Special Attorney in the Middle District of Florida, Bromfield worked between January 2007 and September 2008 as the director of operations for Capital Blu Management, LLC, a Florida corporation that purported to offer investment and managed account services for investors in the off-exchange foreign currency, or “forex,” marketplace. He partnered with two others to operate Capital Blu Management: one as the director of trading operations, and the other as the managing member primarily responsible for soliciting investors.
In or about September 2007, Bromfield and the two other men formed the CBM FX Fund, LP, which pooled investors’ money into a common fund to be traded by Capital Blu Management. Investors, who resided both inside and outside of Florida, were induced to invest in the CBM FX Fund based, among other things, on the Capital Blu Management and CBM FX Fund’s advertised trading results, which posted only positive monthly returns.
In or about January 2008, Bromfield and his two partners knew that the CBM FX Fund sustained significant trading losses, and that the CBM FX Fund had lost approximately 30 percent of its value by the end of that month. At or about that time, Bromfield and his two partners agreed and conspired to post a positive monthly return to the CBM FX Fund’s investors for the month of January 2008. The positive performance results were provided to the CBM FX Fund’s investors on Capital Blu Management’s website, via email, and U.S. mail.
Although Bromfield and his two co-conspirators knew that performance numbers were false, they hoped that Capital Blu Management would make up the losses to the CBM FX Fund, which the three co-conspirators referred to as, the “gap,” through better trading performance in the future. Bromfield and his two co-conspirators also knew that if they reported the losses to the investors, then the investors would have removed their money from the CBM FX Fund. Bromfield and his co-conspirators agreed upon a gap catch-up plan which included “keep[ing] the upcoming performance numbers as low as possible, but still enough to achieve confidence in our client base and future client base.”
Between January and August 2008, Bromfield and his co-conspirators implemented their gap catch-up plan, but failed to make up the losses to the CBM FX Fund. During this time, Bromfield and his co-conspirators continued to provide investors with false monthly performance statements which reported only false positive monthly returns. In addition, during this time, Bromfield and his co-conspirators diverted investors’ money from the CBM FX Fund to pay for Capital Blu Management’s operational expenses. These expenses included, among other things, salaries of approximately $15,000 per month for Bromfield and his co-conspirators, thousands of dollars per month for their luxury car payments, and over $50,000 per month for their use and partial ownership of a private airplane. Bromfield and his co-conspirators also agreed to divert new investors’ funds from the CBM FX Fund to pay redemptions to other investors in order to conceal their fraudulent misrepresentations to investors about the value of their investments.
In or about August 2008, the CBM FX Fund sustained losses of approximately $4 million. Nevertheless, Capital Blu Management again reported a positive monthly return to investors for that month. Soon thereafter, the National Futures Association, an independent self-regulatory organization that oversees commodities and futures trading in the United States, visited Capital Blu Management and suspended the company’s trading operations. Between August 2007 and September 2008, over 100 investors invested approximately $16.6 million into the CBM FX Fund. By September 2008, the investors had lost a total of about $11.8 million.
As part of his plea agreement, Bromfield acknowledged that, after Capital Blu Management’s demise, he started another forex investment company and he accessed and traded approximately $200,000 of investors’ money from Capital Blu Management’s bank accounts. Bromfield also acknowledged that, between 2007 and 2009, he made false statements to law enforcement agents who were investigating Capital Blu Management and he and his co-conspirators. Finally, Bromfield acknowledged that he lied and committed perjury during civil proceedings which were initiated against Capital Blu Management, Bromfield, and his co-conspirators, by the United States Commodity Futures Trading Commission in 2010 and 2011.
This case was transferred to the U.S. Attorney’s Office for the District of Columbia from the Middle District of Florida. The investigation is continuing.
In announcing the plea, U.S. Attorney Machen and Special Agent in Charge Robnett commended the work of the task force consisting of agents from the IRS- Criminal Investigation, the U.S. Secret Service, the Florida Department of Law Enforcement, and the Brevard County Sherriff’s Office, which investigated the criminal case. They also expressed appreciation for the work of the agents from the National Futures Association and attorneys from the Commodity Futures Trading Commission who litigated the civil action. In addition, they acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office for the District of Columbia, including Paralegal Specialists Diane Hayes and Corinne Kleinman, Legal Assistant Angela Lawrence, Auditor Crystal Boodoo, and Information Technology Specialist Thomas (Ron) Royal.
Finally, they thanked Assistant U.S. Attorneys Jonathan P. Hooks and Ephraim (Fry) Wernick of the U.S. Attorney’s Office for the District of Columbia. They were designated as Special Attorneys in the Middle District of Florida, and are prosecuting the case. They also expressed appreciation for the work of Assistant U.S. Attorneys Catherine K. Connelly and Anthony Saler, of the Asset Forfeiture and Money Laundering Section of the U.S. Attorney’s Office for the District of Columbia.13-393