re: Martin Armstrong & metals
Henry,
Here it is:
Top of Form 1
Bottom of Form 1
CFTC Ties Armstrong Fraud to Precious Metals, Crude, Yen
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Sep. 14-MAR--
[B] CFTC ties Armstrong fraud to precious metals, crude, yen
--CFTC will not specify Armstrong's commodities, currency loss
By Heather MacGregor and Melanie Lovatt, Bridge News
New York--Sep 14--The Commodity Futures Trading Commission said
financier Martin Armstrong, who is accused of defrauding Japanese
investors out of about $1 billion, had a variety of futures positions
including yen, crude oil and precious metals. However Daniel Nathan,
deputy director of the CFTC's division of enforcement, declined to
quantify those positions or losses.
* * *
He said that there could be losses in other sectors, although so far
yen, crude oil and precious metals are the only areas the CFTC has chosen
to identify.
While market players have speculated that Armstrong and his companies,
Princeton Economics International and its subsidiary Princeton Global
Management, had maintained large positions in gold and silver, Nathan
would not provide any specifics on Armstrong's precious metals trading
activities.
Rumors started to circulate today in the precious metals trading
community that that Armstrong has been liquidating short positions in both
gold and silver futures. However, the freezing of the accounts would
prevent any activity from taking place, noted Nathan. On Monday, the court
appointed a temporary receiver with the power to take possession of
assets, property and records of PEI and PGM
(story 18733).
The CFTC, the Securities and Exchange Commission, and federal
authorities all filed fraud complaints Monday against Armstrong.
Armstrong is accused of defrauding Japanese corporate investors out of
possibly $1 billion by falsely inducing them to purchase about $3 billion
in fixed-term promissory notes offered by Princeton Economics
International and its subsidiaries. Armstrong allegedly illegally operated
commodity futures trading pools at losses which he concealed from
investors.
The notes, which were promised to provide 4% interest a year, were
used mainly to purchase derivatives, bonds and currencies as well as
futures contracts and options. The proceeds of the fund was supposed to be
deposited into separate accounts at Republic New York Securities Corp, a
subsidiary of Republic New York Corp, but were eventually co-mingled into
a Princeton Global Management account maintained by Armstrong, the
complaints alleged.
The federal complaint against Armstrong accused him of operating an
elaborate Ponzi scheme, where the money from the new investors was used to
pay the artificially high returns to the original investors.
Armstrong covered up the losses--estimated at about $500 million--with
the help of a Republic's head of futures division, William Rogers,
according to the federal criminal complaint unsealed Monday by Mary Jo
White, the US Attorney in Manhattan. Rogers, who was not named in the
complaint but was replaced in his position at Republic, allegedly
issued fake confirmation letters that overstated the value of the funds
and then in some cases distributed those letters to investors.
Republic said earlier in the month that the FSA of Japan and US
federal authorities were investigating its futures division in relation to
a client of the Tokyo branch. It has since confirmed that client was
Princeton. Republic at the time said it launched its own investigation and
subsequently replaced Rogers, who allegedly directly helped Armstrong, and
suspended James Sweeney, the chief operating officer of Republic New York
Securities Corp. About a week later on Sept 9, the FSA suspended all
trading of Princeton Notes.
The CFTC complaint said there were futures brokerage houses other
than Republic involved with Armstrong, but it did not make any specific
reference to them.
The CFTC, which has been trailing Armstrong for at least the past 6
years, says it took action in this particular alleged scheme because it
involved commodities contracts.
In 1993 the CFTC alleged that Armstrong was acting as an unregistered
commodity trading advisor and did not follow CTA record keeping
requirements.
Three years later Armstrong suspended for 1 year after the CFTC alleged he
failed to disclose third-party commission sharing agreements.
The CFTC accuses Armstrong and his two investment vehicles Princeton
Global Management and Princeton Economics International, with fraud by
misrepresentation, acting as an unregistered commodity
pool operator and commodity trading advisor.
Armstrong, who is about 50, was released Monday on $5 million bond by
federal court judge in Trenton, N.J. on these charges. Neither Armstrong
nor his lawyer could be reached for comment. If convicted on the criminal
charges Armstrong could face a maximum of 10 years in prison and a $1
million fine. End
Bridge News, Tel: (212) 372 7562
Send comments to Internet address: metals@bridge.com
[symbols:US;RNB]
The Bridge ID for this story is ZLSWPR
(c) Copyright 1999 FWN
<http://www.futuresource.com/cgi-bin/webart/ai=fwn-meta?990914/160130>
Message 11253084, it appears that Martin Armstrong, a director at Princeton Economics, has
apparently been charged with a massive fraud against Japanese investors. This is
related here as the same Martin Armstrong has been a vociferous defender of the
position there is no collusion in the Gold Market to keep the prices down.
While it is unclear at this stage whether this fraud will have any effect on the
POG. What is true today is the annualized lease rates jumped back up to from
3.5% to over 4% for the six month rate, and all the while the POG held steady.
One other item of significance is that today, the US$ went down against the
Japanese Yen to Y106/US$. this is a significant drop and again did not affect
the POG.
As reported by Bloomberg;
An officer of
Princeton Economics International Inc, a money-management
firm, has been arrested and charged with cheating
Japanese investors in a multi-billion ponzi scheme
that was allegedly aided by a top executive of Republic
New York Securities Corp., prosecutors said.
Princeton Economics director Martin Armstrong cheated
Japanese clients of the firm, which sold more than
$3 billion of notes, U. S. prosecutors charged. Of
that money, about $1 billion is still owed to investors
of Princeton Economics, according to a criminal complaint
filed in federal court in New York."
The Gold Anti-trust Commitee ( GATA) and Armstrong have been trading barbs for
close to a year with Armstrong steadfastly denying there is or was any collusion
by funds in the gold market. What is clear is that for the past year, the amount
of gold supplied to the market and taken up by purchasers, far exceeds the
amount of mined and scrap gold by nearly 80% ( 2,800 tonnes supply to 4,600
tonnes purchased ) With this massive discrepency between supply and demand it is
an inconceivable notion that the POG should be at the current price.
We believe this current scandal, on top of the LTCM scandal last year and the
meltdown of the Tiger fund, poses major concerns to the fund industry and will
cause far more scrutiny in their activities. It is alleged that the funds have
been major participants in the Gold-Carry-Trade that, along with forward selling
by producers, has helped push gold down to these current levels.
Message 11249925 |
