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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of North Carolina

Tuesday, July 5, 2016

Former Operator Of Two Macon Co. Companies Sentenced To More Than 11 Years In Prison On Securities Fraud And Money Laundering Charges

The Defendant Admitted to Defrauding Investors of Approximately $2.5 Million

ASHEVILLE, N.C. – U.S. District Judge Martin Reidinger sentenced today the former operator of two companies located in Franklin, N.C. to 135 months in prison on federal securities fraud and money laundering charges, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.  Barry Carlton Taylor, 64, of Franklin, was also ordered to serve three years of supervised release and to pay nearly $2.2 million as restitution to his victim investors.

U.S. Attorney Rose is joined by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, in making today’s announcement.

“Taylor was a con artist who used lies and deception to convince his victims to hand over their hard-earned money.  Contrary to his lofty promises of huge profits, Taylor’s investors – some of whom were elderly – sustained grave financial losses and may never be able to recover financially after falling prey to this scammer’s investment scheme,” said U.S. Attorney Rose.

According to filed court documents and today’s sentencing hearing, Taylor operated two limited liability companies in Franklin, N.C., “OTC Investments, LLC” (OTC) and “Forex Currency Trade Advisors, LLC” (FCTA).  Beginning in August 2011, Taylor induced 18 victims to invest approximately $2.5 million by falsely telling them he was an expert in the foreign currency exchange market (FOREX) and that their investments would be pooled into trading accounts which he would manage and use to invest in FOREX.  Court records show that Taylor also falsely told his victims that he had created a computer software system that could track the FOREX market, which enabled him to make investments that generated very high rates of return, as much as 2.5% per month. 

According to court records, even though Taylor opened and maintained FOREX trading accounts in the names of his two companies neither company was registered as a commodity pool operator.  Court records also show that Taylor deposited the funds he solicited from the individual victim investors into these trading accounts, but he then withdrew more than half of the victims’ money and lost the rest due to trading losses, fees and commissions.  According to court records, by April 2015 there was very little or no investor funds remaining in the trading accounts controlled by Taylor. 

Taylor concealed the losses by sending the victims false monthly statements, which represented that the investors’ principal was intact and that they were realizing profits as promised.  Court records indicate that Taylor used money from other principal investors to make Ponzi-style payments to investors who had asked Taylor to withdraw their profits on their promised returns.  Taylor also convinced some of the investors to reinvest their “commissions” rather than accepting payments, court documents show.  

In furtherance of the fraudulent scheme, filed documents indicate that Taylor used a number of lies to further induce investors and to conceal the fraud.  For example, in January 2015, Taylor sent his victims fraudulent emails claiming that he had halted FOREX trading due to events involving the Swiss National bank.  In another example, court records show that Taylor created a fictitious entity and a fictitious person in order to send lulling emails to calm his investors, and later lied to victims telling them he was considering taking legal action against this fictitious individual who was supposedly responsible for their trading losses. 

Contrary to promises made to his victim investors, Taylor diverted over half a million dollars of the victims’ investment funds and used the money to cover personal expenses, such as restaurants, entertainment and shopping, among others.  Taylor pleaded guilty in January 2016 to fraud by commodities pool operator and concealment of money laundering charges.

In announcing today’s sentence, Judge Reidinger said that the losses to the individual victims were great, many of whom were deprived of the security of their retirements.

Taylor will be ordered to report to the Federal Bureau of Prisons to begin serving his sentence upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

The FBI investigated the case.  In making this announcement, U.S. Attorney Rose also thanked the U.S. Commodities Futures Trading Commission for their invaluable assistance in this investigation. Assistant United States Attorney Don Gast of the U.S. Attorney’s Office in Asheville was in charge of the prosecution.

Financial Fraud
Updated July 6, 2016