The Joel Nathan Ward Forex Fraud Case

In 2008, a forex trader and fund manager by the name of Joel Nathan Ward was sentenced to nine years in Federal Prison and an $11.3 million fine after he confessed to forex fraud and money laundering charges. By the time he was stopped, the self-professed “forex trader” had taken about $11.3 million from over a hundred investors over the space of three and a half years.

According to an analysis done for the U.S. Attorney’s office in Sacramento California, this forex scam began, as in most Ponzi schemes (learn more about Ponzi schemes), with Ward setting himself up as a forex guru giving special seminars and promising to make investors loads of cash.

The Making of a Forex Fraudster

Ward began his career in the forex market by attending the Learn: Forex school in 1999 in Sacramento California. Ward eventually bought the school in 2004, despite the fact that it was losing money. He has since blamed the fact that he lost most of his investors’ money in part on needing to maintain the school until its planned IPO.

Ward then started a managed fund in 2003 with $300,000 of investor money. By 2005, he was managing over $7 million of customer funds which eventually grew to a total of $15 million before he was through losing most of it. Learn more about managed account forex fraud.

Much like in a High Yield Investment Plan Ponzi scheme, a certain amount is paid out. In this case, over $3.7 million was paid out to keep the “investors” unaware that all of their deposited money was gone. According to the records of the trial, these funds were used by Ward to pay himself and to fund other businesses. These projects included the Learn: Forex School and an investment through a Nevada Corporation in a Mississippi land deal that never panned out.

How Much Ward’s Investors Lost

According to the investigation, Ward’s investors lost approximately $11.3 million of the more than $15 million that Ward received. Furthermore, only an estimated $2 million was actually used to trade forex with, and $1.84 million of that amount was lost in 22 out of 24 total trading accounts.

Only two of Ward’s trading accounts actually made money which amounted to less than $1,000 in total. A rather unimpressive forex trading record indeed!

Other facts uncovered by the investigation include that Ward paid himself $180,000 a year to manage the fund. Also, he conducted “seminars” at top five-star hotels in London, Las Vegas and New York, among other places, where he stayed in luxury accommodations.

Ward Offers a “Solution” to His Fraud Victims

While the sentence has already been passed and Ward will now be spending some time behind bars serving his nine year sentence. Still, he did offer his former investors a chance to benefit from a proposed “recovery plan”, as he called it.

Under this unusual plan, Ward would get $100,000 from an anonymous source. He would then trade with the money until he could pay back all his investors.  Since roughly $11,000,000 went missing in this forex fraud, and with his dismal trading track record that could take him several lifetimes.

In addition, Ward wanted his sentence to consist of house arrest while he traded to make back the millions of dollars he had already lost. Some people think he should be banned from trading with other peoples’ money in any financial market.

While Ward’s heart may appear to be in the right place to some, something seems not-quite-right in the fact that the man is already responsible for losing over $11 million of his client’s money in a large forex fraud!

This begs the question of how exactly did he do this if he did not lose it trading forex, and where did it all go?  Nevertheless, he still apparently insists on making the appearance of wanting to pay back what he most likely will never recover for his former clients – ever.

The Moral of this Forex Fraud Story

Basically, if someone makes outstanding claims of enormous success in trading the forex market with little or no proof and asks that you invest in their “managed forex fund”, you might do better with an investment strategy involving throwing darts at the financial section of your newspaper to pick stocks.

That way at least your money will not grow legs and walk away with some self-styled “forex market guru” that simply wishes to line his own pockets while depleting yours.

Trading in the forex or any other financial market carries inherent risks that may not be suitable for some people. Furthermore, forex trading is a subject that requires knowledge that you cannot learn by simply watching a five minute tutorial video.

Avoid being duped by doing your research before you start forex trading and avoid trusting your money to others who say they want to “manage” it for you. They might actually just want to steal it.

Read more stories on Ponzi schemes and managed account frauds:

Read about one of the biggest and most spectacular Ponzi schemes ever!

Read about David A. Smith who was sentenced to 30 years for a Ponzi scheme.

Watch out for commingled accounts!

CMA Capital Management $4.5 million Ponzi scam.

PanaMoney managed account and HYIP fraud.

Chris Lee

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