Carlin King, 43, of Decatur, has been sentenced by United States District Judge Marvin Shoob to serve three years in federal prison on a charge of wire fraud, in connection with his operation of the foreign exchange investment house “Hanover Stevens,” based in Atlanta. King was sentenced to three years in prison to be followed by three years of supervised release, and ordered to pay restitution in the amount of $2.5 million. King pleaded guilty to the charge on Feb. 23, 2009.
According to the information presented in court: King was a professional securities broker, who traded equity stocks and commodities for clients at various financial firms, mostly in Atlanta, since the 1990s.
In approximately 2002, King founded and began operating “Hanover Stevens,” a retail foreign exchange brokerage firm. Beginning in approximately February 2006, however, King stopped actually investing client money in foreign exchange transactions. The evidence shows he began lying to clients about the returns their investments were supposedly making, and he began operating a fraudulent “Ponzi” scheme. Instead of investing client money in the foreign currency markets as he promised, King began using those funds to pay Hanover Stevens’s increasing operating expenses, investors who had requested distributions, and substantial personal expenses (including living expenses at luxury hotels).
To create the impression that their investments were profitable, King provided account statements to his investors containing fabricated numbers as to the balances in their accounts and supposed investment gains. Because there were no actual investment gains—and because the balances being reported to investors were fabricated—the only way that King could pay any requested distributions was to use newly-invested funds from new investors.
By December 2007—when the unsustainable scheme collapsed—the losses to the investors exceeded $2.5 million.
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