Wednesday, May 11, 2016
Allegedly Used False Promises to Obtain Over $368,000 from Investors
Greenbelt, Maryland – A federal grand jury indicted Sidney J. Charles, Jr., age 49, of Raceland, Louisiana, formerly of Bowie, Maryland, on mail and wire fraud charges arising from an investment fraud scheme. The indictment was returned on April 27, 2016 and unsealed on May 10, 2016, after Charles was arrested late on May 9, 2016, in Levelland, Texas.
The indictment was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation, Baltimore Field Office.
According to the three-count indictment, in August 2009 Charles founded The Borrowing Station, a Nevada limited liability company with its principal place of business in Bowie. From October 2009 through July 2011 Charles served as the president and chief executive officer of the business. Charles marketed The Borrowing Station as an established investment firm that offered significant returns on investments.
The indictment alleges that from at least October 2009 through July 2011, The Borrowing Station, acting through Charles and others, orchestrated and operated a scheme to solicit investors with false promises of high rates of guaranteed return on their investments. Specifically, The Borrowing Station, through Charles and others, solicited investors directly and through its website to participate in a pooled investment plan that traded off-exchange leveraged or margined foreign currency contracts (“forex” or “foreign currency”). The solicitation included false promises, including: that investors could earn substantial investment returns such as 25% per year or 10% per month; that The Borrowing Station was an established, successful, and safe investment firm; and that pool participant funds were guaranteed against trading losses. For example, The Borrowing Station website stated: “If for any reason we do not reach a return of 25%, we will subsidize your account with our money.” The indictment alleges that as a result, The Borrowing Station obtained at least $368,628.37 from at least 17 individuals.
The indictment alleges that The Borrowing Station, through Charles: paid pool participants with other pool participants’ funds rather than from any funds generated by trading forex, and deposited only a portion of pool participant funds into actual trading accounts; hid trading losses from pool participants, including substantial losses resulting from unsuccessful forex trades; and used pool participant funds to pay for Charles’s personal expenses, and to fund The Borrowing Station’s operations.
According to the indictment, to conceal the scheme Charles communicated false information to pool participants in response to their requests for the return of their funds. In addition, Charles and others allegedly issued lulling payments to pool participants that typically approximated the return of 10% per month that Charles, directly and through others, had promised pool participants.
If convicted, Charles faces a sentence of 20 years in prison for each of two counts of wire fraud and for mail fraud. An initial appearance was held on May 10, 2016, in U.S. District Court for the Northern District of Texas. Charles is scheduled to have an initial appearance U.S. District Court in Greenbelt on June 8, 2016, at 1:30 p.m. before U.S. Magistrate Judge Timothy J. Sullivan.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
Today’s announcement is part of the efforts undertaken in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
United States Attorney Rod J. Rosenstein commended the FBI for its work in the investigation and recognized the U.S. Commodity Futures Trading Commission for its assistance. Mr. Rosenstein thanked Assistant U.S. Attorney Sujit Raman, and Special Assistant U.S. Attorney Mara Senn, of the U.S. Justice Department’s Asset Forfeiture and Money Laundering Section, who are prosecuting the case.
Department of Justice
U.S. Attorney’s Office
District of Maryland
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