Atlanta Currency Trader Indicted in Ponzi Scheme

James G. Ossie, 49, of Atlanta, the founder and principal of an Alpharetta, Georgia-based currency trading firm, “CRE Capital Inc.,” has been indicted by a federal grand jury on 10 counts of wire fraud. Ossie was scheduled to surrender in federal court on Friday for an initial appearance, bond hearing, and arraignment.

According to the United States Attorney's Office, the indictment and other information presented in court: Ossie and CRE Capital operated an investment fund for private clients focused on options contracts in foreign currencies. The fund operated from approximately April 2008 into January 2009, when it was shut down by the United States Securities and Exchange Commission.

Ossie and CRE offered investment contracts, in amounts of at least $100,000, that guaranteed the return of an investor’s deposit plus 10% interest within just 30 days. Ossie reportedly claimed to be able to pay such substantial monthly returns because he typically made even more than that through his trading activity. Ossie also reportedly claimed that his trading profits allowed him to fund a substantial cash “reserve fund” sufficient to re-pay all investors their deposit plus 10% monthly profit, in case the market deteriorated.

Authorities say Ossie claimed that CRE Capital even hired outside accountants, or auditors, who reviewed and confirmed the accuracy of the numbers.

The indictment also alleges that although CRE hired outside accountants for limited projects, Ossie did not allow any access to the records of the trading accounts that would have revealed his substantial losses.

Ossie made these representations directly to individual investors, through salespersons known as “correspondents,” through the CRE Capital Web site, and in numerous mass conference calls involving groups of investors and prospective investors.

However, the indictment alleges that these representations were all lies. Instead of making profits sufficient to pay 10% monthly returns and fund a “reserve” account, the indictment alleges that Ossie lost millions of dollars. Just during CRE’s 9-month lifespan, the firm lost over $12 million in its foreign currency trading accounts. The indictment alleges that there was no “reserve” account sufficient to repay investors. By the end of 2008, CRE owed over $23 million in pending investment contracts but only had just over $2 million deposited in all of its bank and trading accounts combined.

Because he was making no profits, Ossie was only able to re-pay investors their deposits and guaranteed 10% returns through what is referred to as a “Ponzi” scheme. Specifically, Ossie allegedly paid his debts to existing investors with money recently invested by new investors. When the time came to pay the returns promised to the new investors, Ossie would recruit more investments from still newer investors. This unsustainable scheme was identified and shut down by the SEC in January 2009.

In the meantime, Ossie had raised over $25 million from over 120 investors, approximately half of which was lost in unsuccessful currency trading.