Scott A. Beatty pled guilty in Manhatan federal court on Thursday, November 10, 2016 to commodities fraud in connection with his scheme to defraud at least 49 investors of more than $825,000 through a scheme in which Beatty solicited investments for off-exchange foreign currency contracts known as “forex.”
Beatty, 41, of Roy, Utah, pled guilty to one count of commodities fraud, which carries a maximum sentence of 10 years in prison and a maximum fine of $1 million, or twice the fross gain or loss from the offense.
According to the Complaint, the Information, and other statements made in open court:
From January 2011 through June 2014, Beatty, through his investment companies peak Capital Management Group, Inc., and Peak Capital Group, Inc., engaged in a fraudulent scheme to obtain investments from individual investors purportedly for the purpose of trading in forex. In connection with the scheme, Beatty made a series of false and misleading representations to investors, on a website he created and aintained and through email, including:
- That Beatty was using investors’ funds to conduct forex trading, when, in fact, Beatty used just $125,000 of the $825,000 in investor funds for trading;
- That Beatty’s forex trading was generating consistently positive annualized returns as high as 43.9% when, in fact, his limited trading was consistently unsuccessful; and
- That Beatty had created individual accounts for each investor, in which Beatty purported to executed forex trading when, in fact, Beatty failed to create individualized accounts.
In addition to the false and misleading representations made on the website and over email, Beatty generated wholly fictitious account statements that he provided to his clients through a client portal on the website.
As a result of these misrepresentations, Beatty obtained more than $825,000 in investments from more than 49 investors, the majority of whom were Japanese citizens who were not authorized to trade leveraged, margined, or financed forex in individually managed accounts under the Commodity Exchange Act. Of the money he did no lose in commodities trading, Beatty routinely converted investor funds to his own use in the form of cash withdrawals and debit card purchases, including at least $517,000 for, among other things, Beatty’s personal expenses such as restaurant bills and retail purchases. I addition, to hide his trading losses and continue to fund his personal lifestyle, Beatty used new investor funds to pay back other investors in a Ponzi-like fashion. In total, Beatty distributed approximately $184,000 back to investors.