Former Pastor and friends on the hook for $8.6 Million for commodity fraud scheme against church members

The US Treasury prints currency imprinted “In God We Trust.” But, perhaps we shouldn’t automatically put all of our faith (and funds) in God’s human representatives.

Just last month, the Commodity Futures Trading Commission (CFTC) reported that Judge Brian J. Davis of the Middle District of Florida ordered Defendants Maverick International, Inc. (Maverick), and its principals Edward Rubin and Wesley Allen Brown to pay $8,605,274.92 in combined restitution and civil monetary penalties for commodity futures fraud, commodity pool fraud, and related violations of federal commodity laws.

Ponzi power of the cloth

Brown is a former church pastor who, along with Maverick and Rubin ran a commodity scheme that preyed on Brown’s church congregation. According to documents filed, Brown solicited at least $2 million from at least 31 members of the public, many from his then congregation.

Brown reportedly used his role as a pastor of a Flagler Beach, Florida, church to defraud congregation members by convincing them to deposit funds with himself, Rubin, and Maverick.  In imposing the civil monetary penalty on Brown, the Court considered his “trusted position as a pastor” and his “defrauding of elderly church members.”

“Investors” were told their funds would be deposited in the Maverick pool to trade in futures contracts or options on futures contracts. A total of approximately $2,762,874.05 was deposited into Maverick’s bank accounts and held in the firm’s accounts and Brown’s personal bank accounts. Of the $2 million, only $574,352.88 was deposited into futures trading accounts held in a non-pooled account in Maverick’s name, the trading of which was solely controlled by Rubin.

Rubin lost $407,888.65 over the months he traded. In the meantime, Brown and Rubin deposited $485,604.35 of investors’ money into their personal precious metals accounts. Distributions of approximately $203,666.67 were returned to some pool participants to further the Ponzi scheme. Meanwhile, the two men spent at least $2,268,44.70 of pool participation money on personal expenses.

Pastor already jailed

Brown is currently incarcerated in Florida, serving a seven and one-half year sentence for securities fraud, embezzlement, and other crimes related to the conduct at issue in the CFTC’s action.

The restitution and civil monetary penalty awards result from the Court’s entry of a Supplemental Consent Order between the CFTC and Maverick and Rubin, as well as an Order entering summary judgment against Brown.  Together, the court’s rulings require the two men to pay $2,151,318.73 in restitution and a $6,453,956.19 civil monetary penalty. Rubin is accountable for $500,000 in restitution and $140,000 of the civil monetary penalty. Maverick is liable for $2,065,178 in restitution and the entire civil monetary penalty.  Brown is j liable for the full $8,605,274.92 amount.

As always, the CFTC cautions that Orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. Hard to pay restitution from a prison cell…

Protect your investors from bad actors acting badly

Oversight matters, particularly when it comes to compliance. In this instance, all parties representing investment funds were in cahoots. But a careful gatekeeper frequently can spot red flags and work to safeguard a legitimate financial services firm exposure. If you’re that gatekeeper, Patrina can help. We’ve built a business on helping organizations stay on the “straight and narrow” efficiently and cost-effectively. So, let’s talk. Call 212-233-1155 to ask about Patrina’s cost-effective and comprehensive, 8-module compliance solution, and compliant data capture, file storage, and records archiving specifically designed for the financial services community. Be smart. Be covered.