Michigan resident, Alan James Watson (“Watson”), was sentenced to 12 years in prison in connection with a scheme to defraud more than 900 investors out of $40 million through his investment club, Cash Flow Financial LLC (“CFF”). As a part of his sentence, he was ordered to forfeit more than $36 million in ill-gotten gains. Watson pleaded guilty to one count of wire fraud last September.
According to court filings, from 2006 to 2009, Watson represented to investors in CFF that their funds would be invested via an equities-trading system developed by an expert consultant, Trade LLC. Watson allegedly promised investors a monthly return of 10%. The government claimed that, in reality, only a small percentage of investors’ funds were actually invested with Trade LLC. Instead, according to court documents, the majority of funds were surreptitiously invested in various, unsuccessful high-risk ventures without the investors’ consent.
In addition, court filings showed that, despite the near total loss of investors’ funds, Watson created false monthly account statements reflecting fictitious profits. The government also claimed that, in true Ponzi fashion, Watson used funds from new investors to pay earlier investors.
In 2010, Watson informed the investment club members that he had not invested their funds as promised, and that the reported profits were false.
Investors nationwide who have been the victim of financial fraud, may contact the Florida securities arbitration attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or by e-mail to firstname.lastname@example.org.