This is the story of Anna Anile:
162. Anna Anile is a 56-year-old single mother of three who lives in New York. Ms. Anile is a clerk in the dietician department of a local hospital.
163. In early 2008, Ms. Anile started listening every week to a radio show called “Follow the Money” hosted by Defendant Kiley. On the radio show, Kiley talked about the current economy and the decline of the stock market. Kiley represented that he was telling the truth about the government, economy, and investing and that his investors were “truth-seekers” who were seeking the truth about these topics.
164. Kiley said that investors should stop investing in the stock market through stock brokers who were making money even though their investors were losing money. Kiley said that he ran a currency arbitrage program for large corporations for several years and that now individuals were able to invest in his program. Kiley said that he had 50 years of experience in investing and that his 28 investors were making double-digit returns. He said that he was not like Madoff because investor funds were kept in segregated accounts in the investors’ name and was available to be returned 24/7.
165. Ms. Anile contacted Kiley in around August 2008 to get more information. Kiley told Ms. Anile that he invested in foreign currencies and made money from the spreads between the currency prices. He said that if she invested with him, her money would be invested in foreign currency arbitrage. Kiley told Ms. Anile that he made money whether the market was up or down.
166. During her phone call with Kiley, Ms. Anile told him that she was a single mother of three children, who made only $20,000 a year. Ms. Anile could invest $17,000, her entire IRA savings which she had accumulated for 10 years. Ms. Anile told Kiley that she did not have much tolerance for risk and that she could not afford to lose $17,000 in her IRA account because it was all the savings that she had. Kiley said that making money without risk would not be a problem and that she would make double-digit returns each year.
167. After the call, Kiley sent Ms. Anile a packet of brochures regarding his company Universal Brokerage FX and the currency program.
168. Ms. Anile reviewed the brochures and spoke to Kiley’s assistant Walter Buckner. On or around September 18, 2008, Ms. Anile took $17,379.09 out of her individual retirement account and invested it in Kiley’s program.
169. After Ms. Anile invested, she received an account statement dated September 23, 2008 mailed from Universal Brokerage FX. This statement 29 showed her investment minus an entry fee of $1,021 which had not been disclosed to her. Ms. Anile called Kiley’s assistant Walter Buckner who told her that the fee was standard but that she would make it back in six months.
170. From October 2008 until July 2009, Universal Brokerage FX mailed to Ms. Anile account statements showing that she was making a profit in her account every day. These statements were titled “Crown Forex, S.A.”
171. In July 2009, Ms. Anile received a letter from Universal Brokerage FX saying that it had received subpoenas from the SEC, and it was not accepting investor funds…
You can guess the rest of the tale – or read the full SEC complaint against Trevor Cook, Pat Kiley et al. Kiley, based in Minneapolis, syndicated a radio show across America called “Follow The Money”. He and his associates are now accused of losing up to $190m on a casino, gambling debt and reckless forex punts.
The SEC sought emergency freezing orders against Kiley and co on Tuesday. But it remains puzzling as to why the US authorities have only moved against this alleged Ponzi now, when victims seem to have been chasing their money for months.
The Swiss authorities, in the shape of FINMA, moved against the Alpine wing of Kiley’s network back in March. Didn’t they tell anyone at the SEC that something might be wrong?
Related links:
A Twin Cities FX scandal – SEC freezes Pat Kiley assets – FT Alphaville