The operator of two companies located in Franklin, N.C. pleaded guilty on Monday, January 25, 2016, to fraud by commodities pool operator and concealment of money laundering charges, for defrauding his investors of approximately $2.5 million, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.
U.S. Attorney Rose is joined by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, in making today’s announcement.
According to the criminal bill of information filed on January 12, 2016, and related plea documents, beginning in at least August 2011, Barry Carlton Taylor, 64, of Franklin, N.C., solicited investment funds from at least 18 victims totaling approximately $2.5 million. Taylor operated two limited liability companies in Franklin, N.C., “OTC Investments, LLC” (OTC) and “Forex Currency Trade Advisors, LLC” (FCTA). According to filed documents, Taylor misrepresented to his investor victims that he was an expert in the foreign currency exchange market (FOREX) and that their investments would be pooled into trading accounts which he would manage and use to invest in FOREX. Taylor also falsely told his victims that he had created a computer software system that could track the FOREX market, which enabled him to make investments that generated very high rates of return, as much as 2.5% per month.
According to court records, even though Taylor opened and maintained FOREX trading accounts in the names of his two companies neither company was registered as a commodity pool operator. Court records also show that Taylor collected money from the individual victim investors and deposited the funds into these trading accounts, but he then withdrew more than half of the victims’ money and lost the rest due to trading losses, fees and commissions. According to court records, by April 2015 there was very little or no investor funds remaining in the trading accounts Taylor controlled.
According to court records, Taylor concealed the losses from his investors by sending the victims false monthly statements that fraudulently represented that the investors’ principal was intact and that they were realizing profits as promised. Court records also indicate that Taylor used money from other principal investors to make Ponzi-style payments to investors who had asked Taylor to withdraw their profits on their promised returns. Taylor also convinced some of the investors to reinvest their “commissions” rather than accepting payments.
In furtherance of the fraudulent scheme, court records show that Taylor used a number of lies to further induce investors and to conceal the fraud. For example, in January 2015, Taylor sent his customers fraudulent emails claiming that he had halted FOREX trading due to events involving the Swiss National bank. In another example, court records show that Taylor created a fictitious entity and a fictitious person in order to send lulling emails to calm his investors, and later lied to victims telling them he was considering taking legal action against this fictitious individual who was supposedly responsible for their trading losses.
Contrary to promises made to his victim investors, Taylor diverted over half a million dollars of the victims’ investment funds and used them to cover personal expense, such as restaurants, entertainment and shopping, among others.
Taylor was released on bond following his guilty plea. The fraud by commodities pool operator charge carries a maximum prison term of 10 years and a $1 million fine. The concealment money laundering charge carries a maximum prison term of 20 years and a $500,000 fine. A sentencing date for the defendant has not been set.
The case is being investigated FBI. In making this announcement, U.S. Attorney Rose also thanked the U.S. Commodities Futures Trading Commission for their invaluable assistance in this investigation.
The prosecution is being handled by Assistant United States Attorney Don Gast of the U.S. Attorney’s Office in Asheville.