Three Maryland-based firms and their operators are facing fraud charges after allegedly scamming $28 million from over 1,000 investors. The firms reportedly targeted African immigrants, promising them guaranteed returns on their digital currency investment pool.
The U.S. Commodity Futures Trading Commission and the Securities and Exchange Commission jointly charged three individuals who they claim orchestrated the scam. In its press release, the CFTC claimed Dennis Jali, a South African citizen previously residing in Maryland, was the mastermind. Jali allegedly worked with two Maryland residents, John Frimpong and Arley Johnson who solicited investment from the public.
From 2017 to 2020, the three were accused of luring over 1,000 investors who contributed at least $28 million to three companies—1st Million LLC, Access2Assets LLC and Smart Partners LLC. They allegedly told the investors that the funds would be held in “secure contracts” and would be used to trade forex and digital currencies. Once the pool participation term ended, the funds would be returned in their entirety to the investors, they claimed.
The three reportedly promised the investors guaranteed returns of up to 30% per month. They also touted Jali as an expert trader who had achieved 1,700% in returns in a previous investment fund. On their online promotional videos, they claimed he realized 400% in returns in 6 weeks.
However, the three reportedly didn’t invest any of the funds in digital currencies or forex. Instead, they structured their firm as a Ponzi scheme, using at least $18 million to make payouts to some investors, giving them an illusion of profitability. They further channeled at least $7 million into luxuries such as expensive cars, personal travel and other living expenses.
In its charge, the SEC further revealed that the scammers had targeted African immigrants in Maryland, exploiting their common ancestry and religious affiliations. Jali, for instance, posed as a pastor who had struck gold with digital currency trading.
The CFTC charge is seeking full restitution of the investors’ money, disgorgement of ill-gotten gains, permanent trading bans for the three and civil monetary penalties. In addition to these, the SEC also named Access2Assets as a relief defendant, ‘seeking the return of proceeds of the alleged fraud to which it had no legitimate claim.’
1st Million is the latest scam targeting American investors that has ties to South Africa. Just two weeks ago, the Texas and Alabama states securities regulators issued a cease and desist order to three South African firms. The firms were touting a debit card that they claimed was pegged on stablecoins. A month earlier, the Texas regulator had shut down Mirror Trading International from operating in the state. The South African firm claims to offer a BTC trading pool for investors. However, Canadian and South African regulators have also warned its citizens against it.
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