Opinion ID: 2769575
Heading Depth: 2
Heading Rank: 2

Heading: Forex Fraud Scheme

Text: In addition to the fraudulent-stock scheme, Odoni also participated in a Forex fraud scheme, which involved the sale of foreign-exchange options. Foreign-exchange options allow investors to speculate on the future prices of major currencies such as the pound, yen, euro, and dollar.1 In furtherance of the Forex scheme, Michael Geraud, Jeff Jedlicki, and others created Hartford Management Group, a Barcelona firm that employed salespeople who called potential investors and persuaded them to buy foreignexchange options. Legitimate firms selling foreign-exchange options are required to disclose the risks of foreign currency investment and honestly advise investors about the outlook of the foreign currency market. Hartford Management Group, by contrast, falsified information about future developments in the currency market and told investors only about the profits they could expect to gain from trading in the foreign exchange market without disclosing any of the associated risks. Legitimate foreign currency firms also typically place trade hedges against their 1 For instance, an investor who believes the price of the euro will increase might purchase an option to buy euros in one month for $1. If the price of the euro rises to $1.50, the investor can exercise his option, buy the euros for $1, and then turn around and sell the euros for $1.50, netting a $0.50 profit per euro. 4 Case: 13-13528 Date Filed: 01/13/2015 Page: 5 of 27 clients’ trades, so that if a client is right about the price movement of a currency, the firm has enough money to pay the client back. Hartford Management Group, on the other hand, “never hedged [its] accounts at all”; they “just rolled the dice that over time the clients would lose.” Odoni participated in the Forex fraud scheme by providing escrow services to Hartford Management Group—that is, he received investor funds and transferred them to a clearing firm. In this role, Odoni created an escrow company, International Escrow Enterprises, and set up accounts at Bank of America to receive investor funds. In exchange for providing these escrow services, Odoni collected a 5% escrow fee, which he split with co-defendant Paul Gunter and Richard Pope. In total, more than $10.7 million of investor funds came through International Escrow Enterprise’s bank accounts. On March 29, 2009, Odoni was brought to the United States from the Dominican Republic for prosecution. A jury subsequently found Odoni guilty of the following counts related to the schemes: one count of conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 1349; one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956; one count of engaging in illegal monetary transactions, in violation of 18 U.S.C. § 1957; ten counts of 5 Case: 13-13528 Date Filed: 01/13/2015 Page: 6 of 27 mail fraud, in violation of 18 U.S.C. § 1341; and nine counts of wire fraud, in violation of 18 U.S.C. § 1343.