US prosecutors have accused a prominent Florida lawyer and two businessmen of defrauding investors out of more than $15 million (€12.35 million) using an Irish investment company.
One Florida plastic surgeon told the FBI that she lost over $10 million.
According to a federal indictment launched in Cleveland, Ohio, the three men told investors that their money was invested in "high yield" accounts with the reputable investment company, AIG.
Instead, the money was wired to a Dublin company called Magenta Forex Ltd, which was trading at a "substantial loss" and was suspended from trading with AIGI, the international section of AIG, the indictment says.
The accused allegedly routed millions of dollars through Irish bank accounts and sent it back to investors as "profits". However, investors later learnt they were receiving a portion of their original investment, and that the profits didn't exist.
Plastic surgeon Carolyn Cline, from Florida sank $10.2 million into the scheme and is now suing to have her money returned in a separate case.
The Cleveland indictment also alleges that the three accused launched a fake lawsuit against the chief operator of the Dublin company, accusing him of theft, as a way of deflecting attention from their own wrongdoing.
It charges Anthony A O'Brien, also known as Harvey Allen O'Brien (43), of Shaker Heights, Ohio, Delmer C Gowing (61), an attorney from Del Ray Beach, Florida, and John S Everding (55), of San Francisco, California, with conspiracy to sell unregistered securities, securities fraud and wire fraud.
The indictment alleges that from August 2000 to November 27th, 2001, the defendants conspired to sell unregistered securities in Mr O'Brien and Mr Gowing's Cleveland company called Capital Markets Trading Group, which claimed to trade in international currencies.
The three accused are also charged with securities and wire fraud because they allegedly had no experience in currency trading and claimed that there was little or no risk to investors.
The accused allegedly sent $12 million of investors' money to the AIGI account of the Dublin company, Magenta.
However, Magenta suffered "substantial losses", which were never divulged to investors.
In 2001, the defendants allegedly took $2.7 million from Magenta's AIGI account and gave $2,503,000 of it to the investors as "profit", keeping the rest. In March, 2001, AIGI cancelled Magenta as a trading partner.
The following month, Mr Gowing allegedly arranged for Magenta to wire $3.2 million from its Irish bank accounts to him. Again, some of the money was given to investors as false "profit" and the rest was allegedly kept by the three accused.
As investors became suspicious, Capital Markets launched what the indictment claims was a "false" lawsuit against the chief officer of the Dublin company.
Magenta, which was incorporated in Ireland in 1999 according to the Companies' Registration Office (CRO) was dissolved in December 2003. Its directors were listed as Rafiq Petkar and Rajesh Patel, both with London addresses.
According to the CRO, Magenta Forex never filed accounts with the office during its period as an Irish-registered limited company.
Magenta Forex was previously registered in England, but was dissolved there in May 1999, shortly after the British regulator, the Financial Services Authority, (FSA) issued a writ against it and another of Mr Petkar's companies Graceland Investments to stop trading.
The FSA claimed both were unlicensed companies under the UK Financial Services Act.
