Professor and CPA Charged with Forex Fraud
May 27, 2009 by Lela Davidson
Filed under Finance
The Securities and Exchange Commission Wednesday obtained an emergency court order to freeze the assets of Texas A&M finance professor Robert D. Watson. The accounts of Houston lawyer and CPA Daniel J. Petroski was also frozen, along with two firms. Watson and Petroski are charged with forging bank records to trick investors into believing they were earning excessively high returns in foreign exchange trading.
The Players & The Crime
Watson and Petroski are alleged to have raised over $19 million from investors using the following entities:
- Alpha One: This foreign-currency trading software program was purportedly owned by their firm.
- PrivateFX Global One Ltd.: Owned the Alpha One software.
- 36 Holdings Ltd.: This so-called “deal clearing company” was to service Private FX Global One Ltd. This company was owned and controlled by Watson.
The SEC alleges that Watson and Petroski told investors they had millions of dollars in bank accounts in the U.S. and Switzerland and that their foreign exchange trading business had achieved an annual return of more than 23 percent since its inception and has never had a losing month. The defendants’ historical performance claims are not supported by valid financial records.
“As we allege in our complaint, these defendants used modern technology to create professional-looking, bogus documents that supported their extraordinary claims,” said Rose Romero, Director of the SEC’s Fort Worth Regional Office.
Phony Documents, Again
As we’ve seen time and time again, when asked for proof of returns, Watson and Petroski produced phony records purporting to show that 36 Holdings held an account at Deutsche Bank. The SEC also charges that the defendants provided the Commission staff with phony bank statements from a Swiss bank and falsely claimed that 36 Holdings had almost $70 million on deposit there, including $11 million of Global One funds.
I always wonder why smart people like this choose to go to such lengths to commit fraud. Wouldn’t it be easier to engage in a legal entrepreneurial venture?
Image Credit: d70focus, Flickr
I’m his daughter, and I was just wondering how much of your article is actually correct? For example he is not a professor, he was a professor. Although, I could see how that title would bring the amount of attention to the article as you thought necessary, clever but fictional.
And the answer to you question is:
Smart people make mistakes just like everyone else does, simple as that.
Thank you for your feedback, Morgan. I apologize for the oversight. According to the SEC, Mr. Watson resigned from his position as a professor at Texas A&M in April. The facts of this post are based on a press release by the SEC. It can be accessed here:
http://www.sec.gov/news/press/2009/2009-122.htm
I was under the impression that Professor was an earned/awarded title like Doctor. Once given it could only be taken away by the disciplinary body of the awarding authority.