PTC man ordered to pay $10.8 million in Ponzi scheme penalties
Feds say E.A. Gresham bilked forex investors out of $15.9 million
A longtime Peachtree City resident who served as Southeastern director of the Fellowship of Christian Athletes in the 1980s is facing criminal mail fraud charges and must pay at least $10.8 million in fines and restitution for defrauding more than 100 investors, according to a federal agency, the U.S. Commodity Futures Trading Commission.
The federal civil case against E.A. Gresham ended last month with Newnan U.S. District Judge Thomas W. Thrash, Jr., ordering Gresham to “disgorge” $2.7 million to be distributed to the investors who believed Gresham’s claims of returns of 5 to 10 percent a month in profits made during so-called “forex” trading.
In one instance, Gresham said to an investor, “[a] good currency trading account is one of the best and safest places for money. ... It’s like God has put us in a ‘cocoon’ for protection and ongoing profitability.’”
Gresham resided for many years in the Fisher’s Bank subdivision off Peachtree Parkway South. His current whereabouts are unknown.
Court papers show that Gresham still had nearly $500,000 in various frozen bank accounts as of September 2011. That apparently was all that was left of the nearly $16 million in investments from more than 100 people, many of whom had invested their retirement accounts and life savings with Gresham.
The CFTC charged in the civil suit last September that “Between 2004 and 2009, Eldon Gresham, Jr. traded off-exchange foreign currency (forex) on behalf of over 100 customers. Gresham convinced customers to invest money with him by representing that his forex trading program would generate large returns with very little risk. Specifically, Gresham told potential customers that he was consistently profitable and had a strategy that allowed him to make money whether the market went ‘up, down, or sideways.’ Finally, Gresham promised extremely high monthly returns between 5 and 10 percent, guaranteeing a 30 percent annual return to one customer.”
“At the same time, Gresham downplayed the risks associated with his trading,” the CFTC charged. “He told customers that their money would be safe, stating that all funds would be insured by the federal government. He also told customers that they could withdraw their funds at any time. In exchange for the investments, Gresham provided promissory notes and investment agreements guaranteeing a certain percentage of his profits.”
“Although Gresham acquired over $15.9 million in customer funds, he traded only a small percentage of that total,” the federal agency charged. “Despite his representations to the contrary, from August 2007 on [to 2009], Gresham traded at a cumulative loss. Ultimately, Gresham lost approximately $40,788.21 trading forex.”
The government said Gresham actually traded only a small percentage of the nearly $16 million invested with him. Despite that, “he sent email and fax updates falsely reporting substantial gains. In March 2009, Gresham told his customers that he had made large profits. Gresham, however, did not trade forex in March 2009. Even in June 2009, Gresham’s most successful month, he falsified reports to clients. Gresham also forged letterhead by Forex Capital Markets, LLC to send statements indicating false gains. Gresham stated that ‘[i]n the trading program, I didn’t keep up well at all with how far behind I was getting. My false reporting was just a temporary means that justified the ultimate end that I believed in.’”
Before the scheme was ended, Gresham sent $13.15 million to customers in “returns,” consisting entirely of money from other investors, the CFTC said.
“Gresham misappropriated the remaining $2,710,454.30, including spending or withdrawing $2,537,817.95 in customer money. When customers asked to withdraw their investment, Gresham used other customer funds to pay them,” according to the federal court suit.
The CFTC filed suit against Gresham, his son, Kirk, and two other investors who had received large “returns” during the course of the Ponzi scheme.
“[Gresham] solicited more than 100 customers over the course of five years,” Judge Thrash wrote in his summary judgement. “He made numerous knowing misrepresentations and misappropriated more that $2 million, much of it from customers’ retirement funds. Gresham has yet to take responsibility for his actions and continues to claim he was the victim of delusions.”
The judge continued, “The violations were knowing and continuous. Gresham defrauded over 100 customers, collecting more than $15 million. ... Gresham misappropriated $2,710,454.30 for his personal use. Thus, the Court will impose the maximum civil penalty of triple the amount that Gresham gained, or $8,131,362.90.”
The court also permanently barred Gresham from any kind of commodities trading in the future.
Judge Thrash also ruled that an Alabama defendant and his company must disgorge $5.2 million to Gresham’s customers “because they allegedly received funds as a result of Gresham’s conduct to which they had no legitimate entitlement.”