Not surprisingly, a federal judge finally got around to sentencing a forex scam artist to nine years in prison yesterday. In doing so he rejected the defendent's request for home detention so he could try to pay $11 million in restitution by speculating in the foreign currency market. If you aren’t aware of it, the defendant, Garland E. Burrell, Jr., was the brains behind Learn: Forex, Inc., an outfit that touted the notion that it’s easy for anyone to make millions betting on the fluctuating value of world currencies.A scam in its own right, ‘Learn: Forex’ wasn’t why Burrel found himself sitting in the hot seat before the U.S. District Court. No, his downfall came as a result of a scam he perpetrated against 100 odd investors who subscribed to his services as a trader. Burrell took in $15 million, traded $2 million of that losing all but a few thousand dollars in the process.
What happened to the remaining $13 million, you ask? He apparently invested that a number of failing business ventures and converted the rest to personal use.
Just how successful was Ward as a trader/trading mentor? A finance professor hired by the Commodity Futures Trading Commission to analyze Ward's accounts concluded that he and the traders he hired lost $1.84 million of the $2 million they actually invested in the forex. Of those managed accounts, Ward managed two that over a three year period showed a profit of less than $1,000.
And is it any wonder? Ward ran his forex fund out of an office on West Monte Vista Avenue in Turlock, California, not exactly the center of the world's financial markets. Rumor has it traders there still have to rely on dial up. What's more, he had little or no formal financial training beyond a high school education and a brief stint as an estate planner. The bulk of his work experience was in the construction industry.
Frankly, I don’t feel sorry for the investors. Anyone who buys into the idea that he/she can turn $50,000 into a million in a matter of a few short years trading the forex obviously has eggs for brains. Reminds me of the idiot homeowners who bought into interest only mortgages in the US knowing full well that sooner or later they’d lose their homes because they’d never earn enough to make the fully amortized payment. Tough tooties!
In the end Ward's conviction should be a lesson to everyone. Trade the forex for fun. Trade it to make a modest but consistent profit. But don’t be silly enough to believe that it’s going to lead to an early and prosperous retirement.
Ain't going to happen.
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