US Duo Plead Guilty to $30m Forex Fraud Scheme

Two US men have pleaded guilty to defrauding online investors out of tens of millions of dollars, in a foreign exchange (forex) scheme dating back a decade.

Patrick Gallagher, 44, of Middleborough, Massachusetts, and Michael Dion, 49, of Orlando, Florida, each pleaded guilty to one count of conspiracy to commit securities fraud.

They created a fake company, Global Forex Management, and lured investors with promises of big returns based on previous trading results that they had fabricated, according to the Department of Justice (DoJ).

Investors were told their funds would be traded via a partner company, IB Capital, which was actually run by a co-conspirator.

“In May 2012, Gallagher and Dion executed their scheme by intentionally creating losing trades for the investors and effectively stole $30m from their victims,” the DoJ explained.

“After fabricating the massive trading loss, Gallagher and Dion routed the stolen money through shell companies they had set up all over the world.”

The duo also worked with co-conspirators in the Netherlands to steal the funds.

Investment fraud is one of the highest earners for cyber-criminals. Last year it made them nearly $1.5bn off the back of 20,561 reports to the FBI.

The US government’s Commodity Futures Trading Commission (CFTC) warns that it has seen a “sharp rise” in forex scams over recent years.

“The forex market is volatile and carries substantial risks,” it says. “It is not the place to put any money that you cannot afford to lose, such as retirement funds, as you can lose most or all [of] it very quickly.”

Gallagher and Dion face a maximum jail term of five years.

What’s Hot on Infosecurity Magazine?