NY Man Charged with $5M in Fraudulent Futures Sales

January 30, 2005 (PLANSPONSOR.com) - The US Commodity Futures Trading Commission (CFTC) has sued a Staten Island, New York hedge fund manager for fraudulently selling foreign currency futures contracts that generated him more than $5 million.

According to a  CFTC news release , Alexsander Efrosman, a.k.a. Alex Besser , and two hedge funds under his control, Century Maxim Fund Inc. , and AJR Capital Inc , were charged with fraud in the illegal sales.

Specifically, the CFTC charged that, between April 2004 and June 2005, defendants fraudulently solicited and obtained more than $5 million dollars from as many as 110 customers for trading managed accounts in forex futures contracts that were not, as required, traded on a registered entity. The complaint charged that defendants misappropriated the funds.

According to the government, Efrosman was previously indicted for mail and wire fraud relating to foreign currency trading in a different scheme, and fled the country. He subsequently was extradited from France to face trial, and in November 2000, pleaded guilty to nineteen counts of mail and wire fraud before the US District Court for the Southern District of New York. There, according to the government, he was sentenced to a three-year jail term.

The CFTC’s latest suit alleges that shortly after his release from prison, Efrosman set up a new forex scheme through purported hedge funds Century Maxim Fund and AJR Capital. Allegedly, he fraudulently solicited customers to trade forex through Century Maxim Fund, which, Efrosman falsely represented as a hedge fund that had attracted investments from a large number of high net-worth individuals.

The government also charged that Efrosman fraudulently solicited customers for forex trading through AJR Capital, which, Efrosman represented to be an opportunity for customers of more modest means to profit from forex trading. According to the complaint, Efrosman misappropriated more than $300,000 from Century Maxim Fund investors and more than $4.9 million from AJR Capital investors.

The suit also alleges that Efrosman provided his customers with fictitious Century Maxim and AJR Capital account statements reflecting trades that did not actually occur, and profits that did not exist. According to the complaint, the fictitious statements were instrumental in furthering the fraud and the solicitation of new customers.

The CFTC filed its sealed lawsuit on September 30, 2005. On that day, court orders were entered which, among other things, froze defendants’ assets and sealed the complaint. The court’s seal was lifted on January 24, 2006.

According to a Reuters report, authorities do not currently know where Efrosman is and have a motion pending to serve him with the complaint via publication, a CFTC spokesman said.