Here we go again, the CFTC or Commodity Futures Trading Commission busted well-known Options hustler, Jared Davis of Sandusky, Ohio.
Additionally, in a concurrent filing, the United States Attorney filed a 22-count indictment for conspiracy to commit wire fraud, conspiracy to launder money, wire fraud, money laundering, obstruction of justice, and tax evasion.
For most of us, September 17, 2019, was like every other day. We spent the day making our football picks, tried to scrape out profits from the stock market, and hopefully read a funny article on TradingSchools.Org. However, for poor Jared Davis, he spent the day in the back of a police car. All shackled up like a Hawaiian pig at an $8 luau.
Yep, Jared got arrested. And from what TradingSchools.Org heard from witnesses, the FBI woke him up at 4 am. The wife and kids were wild-eyed, screaming, and terrified as the badges and guns moved throughout the fancy house. They took all the computers, phones, papers, and any evidence laying about. Most importantly, they took Jared. And since Jared was a prick, they waddled him out to the police cruiser — still in his underwear.
Getting arrested by the FBI at 4 am is fucking scary. I should know.
What exactly did Jared Davis do wrong?
According to the FBI and the United States Attorney court filings, Jared had been operating a phony Forex, Contracts For Difference, and Binary Options brokerage out of his house, and a boiler room located in downtown Sandusky.
How did the scheme work? Glad you asked. Beginning in about 2014 through the present, Jared was running an unlicensed and unregistered stocks, options, and Forex brokerage.
Who needs to bother with registering with the SEC or the CFTC anyway!? That’s a waste of time, and those pesky regulations meant to protect investors — who needs those? ( I am being satirical)
In the past few years, TradingSchools.Org has drafted quite a few articles about the “white label” phony brokerage industry. What the heck is a “white label” phony brokerage? In a nutshell, offshore companies plug financial data into a piece of software that looks like a real brokerage, in every imaginable way, except it is not real. Instead, it’s just a video game where retail traders can open accounts and execute “live” trades on the platform.
The problem is that these “white label” trading platforms are incredibly easy to manipulate so that the investor is virtually guaranteed to lose. Think of it like a slot machine at an Indian casino, at any time, the casino can flip a switch and the machine simply stops paying. Or, they can rig the machine so that your “penny” bets pay at a higher frequency, but the moment you start upping it to “quarter” bets, the machine tightens up like a straight butthole at a gay bar.
Do you need an example of one operation where this is happening right now? Read my articles on Meir Barak at TradeNet. It explains the scam in granular detail…
Fraudulent “live trading room”
The scam was clever. Jared Davis had several living trading rooms and affiliate marketing agreements where 3rd parties would provide “education and trading signals” to the retail investor.
The educational component supposedly taught people how to use technical analysis to predict the stock market. The victim would be given the educational products in hopes of luring the victim into actually taking trades.
The “live trading room” would be the “education in action” where the victim would watch the moderators supposedly execute live trades. The victim would watch the supposedly profitable trades and attempt to replicate the moderator.
However, the moderator was using a version of the software that virtually guaranteed that the moderator’s trades would be successful, while the trades of victims would be harder to execute. The victim would continue to attempt to replicate the moderator at ever-worsening prices. All the while, the moderator would enthusiastically encourage the victims in live chat to “get your orders filled” no matter the cost.
Additionally, the live trading rooms contained “shills” that would hype the results by declaring themselves also profitable. However, the “shills” were nothing more than a staged audience.
The end result was predictable. The moderator, who represented the phony brokerage would nearly always be successful. While the customers would always lose.
Some customers were actually good at trading, they still got screwed
According to the criminal indictment, some of the customers never participated in the “live” trading room and instead deployed their own strategies.
Some of these strategies were quite successful. The US Attorney highlighted several instances that resulted in large losses for Jared Davis. This frustrated and angered Jared Davis immensely. As a result of experiencing losses, Jared demanded that the “white label” software provider rig the software so that the trades became even more difficult to profit.
Yet again, the successful trader was able to keep “beating the house” and subsequently demanded payment. Did the victim get paid? Not a chance. Jared Davis simply refused.
Hide and seek from the regulators
As regulators began to tighten the noose on Jared Davis with subpoenas and regulatory action, he then attempted to circumvent the regulators by creating various shell companies and websites to keep the scam rolling.
The first company was Option Mint, then Option King, and then Option Queen, and finally Option Prince. However, the one connecting piece was the boiler room located in Sandusky Ohio.
Additionally, Jared was unaware that the FBI had subpoenaed Jared’s email server and as the emails were darting throughout the criminal network, employees, customers, that everything was being read and watched by investigators.
It certainly looks like Jared will be going away for a while. Thanks for reading. Another investment scammer bites the dust.