$42M default judgment in investment scheme case

Federal judge issues $42 million default judgment in investment scheme case

By Dirk Lammers, Associated Press WriterOn Friday July 17, 2009, 8:16 am EDT

SIOUX FALLS, S.D. (AP) -- A federal judge in South Dakota issued a $42 million default judgment Thursday against a currency trader accused of bilking nearly 200 people in a Ponzi scheme.Jeff Lowrance did not show up for the brief afternoon hearing, and he has yet to respond in court to the March lawsuit after being served with court papers in Houston.Attorney information for Lowrance could not be obtained and he could not be located.Wanda Howey-Fox, the plaintiffs' attorney, told Judge Karen Schreier that she believes Lowrance left Texas for Panama.The 199 plaintiffs -- five of them from South Dakota -- accuse Lowrance and his New Zealand-based First Capital Savings & Loan of fraud, breach of contract and fraudulent mismanagement of offshore foreign currency exchange accounts.The suit claims Lowrance failed to make live market trades, transferred money from one client's account to another to keep up the appearance of earnings, and used proceeds for personal gain and other business ventures, including an alternative newspaper he started called USA Tomorrow.Howey-Fox said clients drained retirement and college accounts, mortgaged homes and sold businesses in hopes of earning 7 percent monthly returns."Clearly, he preyed upon people," she said.In an online survey geared to those looking to distribute USA Tomorrow, the publication entices potential distributors to also take advantage of the finance company opportunity."Now the big money," the survey said. "As one of our distributors, you can refer new clients to our International Finance Company that we own and operate."Howey-Fox said First Capital Savings & Loan clients were given online access to their accounts and cash was deposited and withdrawn through wire transfers. Clients were happy as long as the monthly returns kept coming, she said.But when the dividends stopped coming in mid-2008 and investors started to grow weary, a writer hired for USA Tomorrow began writing online accusing Lowrance of being a con artist. The complaints began to snowball.Howey-Fox said the finance company drew people into the investment opportunity through word of mouth, telephone and e-mail. Accounts were opened with anywhere from $10,000 to $750,000.Also listed as defendants are Mentor Investing Inc., Swiss Providence, Logos Publishing Group, Marketwise Trading, First Capital Savings & Loan Ltd. and Lowrance's alternative newspaper.Howey-Fox gave the court affidavits from some of the clients so Schreier could consider punitive damages. Schreier said she would issue a written ruling later.

http://www.classcreator.com/X-CA-Investment-Recovery-Group-2009