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SEC alleges St. George man involved in fraudulent foreign currency trading scheme

SHARE SEC alleges St. George man involved in fraudulent foreign currency trading scheme

SALT LAKE CITY — A St. George man raised as much as $25 million in an allegedly fraudulent foreign currency trading scheme and continued to take investors' money after the company experienced staggering losses, federal authorities say.

The Securities and Exchange Commission filed a lawsuit this week against Clifton K. Oram, 44, and two other men who worked as sales agents for MexGroup, a company formed in Mexico by an American fugitive indicted on criminal charges stemming from an unrelated Ponzi scheme. The lawsuit claims Oram, a former insurance agent, was not licensed to sell securities and failed to verify MexGroup's track record other than to look at its website. He once accompanied potential investors to Mexico "but instead of performing any due diligence concerning MexGroup or its claims of fantastic returns, Oram spent most of the trip sightseeing and relaxing," the lawsuit states.

Oram through his companies KCM Marketing and Adelaide Partners engaged about 15 sales agents who brought in nearly half of the $50 million mostly U.S. investors lost in MexGroup in November 2008, according to the suit. MexGroup paid Oram based on the investors he brought in.

The moving force behind MexGroup is a U.S. citizen living in Mexico named Gary L. McDuff, who is also known as Gary Inman. He was convicted on two counts of money laundering in 1994. He is currently a defendant in an SEC action involving an earlier "high yield" investment scheme. Last year, he was indicted on criminal charges related to a U.S.-based Ponzi scheme and he remains a fugitive, according to the lawsuit.

MexGroup claimed annual returns of more than 44 percent in 2006 and more than 31 percent in 2007. An analysis of its trading records, however, shows that the firm actually had net trading losses exceeding $1.6 million in 2006 and $4.5 million in 2007, the complaint says.

"In November 2008, MexGroup notified its customers that virtually all of their money was lost," according to the complaint.

Over the next several months, MexGroup gave changing explanations as to why the money was lost and how it was trying to recover it. "These facts should have alerted Oram to potential fraud by MexGroup," according to the lawsuit.

Also named in the suit are Don C. Winkler, 77, a former Tucson, Ariz, resident reportedly living in Panama, and William R. Michael, 51, of San Jose, Calif.

The complaint says the three "blindly accepted" MexGroup representations and took no significant steps to investigate its principals or viability of the investment. "Egregiously, Oram and Winkler continued to offer and sell the MBFX offering even after the November 2008 collapse."

When once confronted by some of his investors concerned about sending their money to Mexico, the lawsuit states, Oram told them it was going to Switzerland to be traded.

e-mail: romboy@desnews.com