Massachusetts Man Defrauds Cemetery Employees, Soliciting $1.7M for Forex Investments
The U.S. Securities and Exchange Commission charged Tewksbury, Mass., resident Jonathan Webb for defrauding investors, many of which did not speak English, in a securities offering. Many of these investors were low income and worked for Webb at a Massachusetts cemetery. Webb has agreed to settle the case and to pay almost $400,000 in monetary relief.
From at least January 2021 to August 2023, according to the SEC’s complaint, Webb, age 49 at the time of the complaint, solicited and accepted approximately $1.7 million from at least 34 people for investment purposes.
As background, Webb began working as an arborist at a Massachusetts cemetery in 1994 and by 2019 had become a supervisor of tree maintenance. Webb had no investment experience or training beyond his workplace retirement account and trading securities in a personal trading account. Around 2019, Webb attended a two-week course to learn about online trading. The second week of the course focused on trading in the foreign currency exchange market, or Forex market. After the course, according to the complaint, Webb proceeded to use his own money to trade Forex, achieving both gains and losses over time.
After attending the course, Webb learned from online sources that if he used certain overseas brokerage firms he could trade Forex with leverage of up to 500:1. The term “leverage” at the overseas brokerage firms did not involve the customer borrowing funds to trade. Rather, the firm allowed the customer to trade a larger position. One overseas brokerage firm’s website stated: “For example, with $1,000 in your trading account and leverage of 200:1, you can have trading capacity of $200,000.”
According to the SEC, Webb also familiarized himself with Forex Expert Advisors, software trading programs which claim to execute automatic Forex trading strategies according to a computer programmed algorithm. He particularly focused on one called Barclays Expert Advisor, as it advertised “gains of 15% per month over many years with very small losses.” It is reported that Webb’s due diligence regarding the program was minimal.
Webb discussed his Forex investments with employees of the cemetery and also with his church community where he was the president and a board member. According to the complaint, he said he could earn extravagant returns doing Forex trading and that they could as well.
Beginning in at least January 2021, Webb began soliciting and accepting money from employees, church members and friends for purposes of investing in Forex. As alleged, Webb falsely told investors he could double their money within a year by pooling it and investing in Forex, and he guaranteed the return of the capital and any interest earned. Several of the investments were provided to Webb cash in-hand. As alleged, Webb had no real system for recording the names of investors, amounts invested, dates of investment, investment returns, or amounts paid back to investors. Webb also did not keep track of nor did he record the amount of investor funds actually invested in Forex.
For investors who did not have tens of thousands of dollars to invest, the complaint alleges, Webb helped secure personal loans that enabled them to invest with him. According to the complaint, Webb converted investor funds to crypto assets and transferred the converted funds to overseas brokerage firms in Dubai, St. Vincent, and the Grenadines that permitted Webb to invest in Forex using the 500:1 leverage and the trading program. The SEC complaint further alleges that Webb lost hundreds of thousands of dollars in investor funds using the trading program.
Despite these losses, Webb allegedly continued to solicit and accept investor funds, falsely guaranteeing the return of capital and promising exorbitant potential returns. By August 2023, the complaint alleges, Webb had lost most of the investor funds he had received by investing in Forex. In addition, according to the SEC complaint, Webb used investor funds to pay back some earlier investors and misappropriated funds for personal expenses.
The SEC’s complaint, filed in the United States District Court for the District of Massachusetts, charges Webb with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder.
Without admitting or denying the allegations in the complaint, Webb has consented to a permanent injunction from violating those provisions, a conduct-based injunction, disgorgement of $250,753 plus prejudgment interest of $29,391, and a civil monetary penalty of $118,225. The settlement is subject to court approval.
Click here to visit the AltsWire directory page.
