Sometime around April 2008, Christopher Brown Cornett, 43, of Buda, TX, came up with a business plan, an idea, a vision – well, okay, sure, federal prosecutors would more likely prefer to describe it as a crime. In hindsight, it wasn't all the clever a scam. If I were to merely describe Cornett's scheme as one involving a Forex Ponzi, that two word description would pretty much tell you the whole thrust of this droll undertaking.
By September 2009, Cornett had another partner in crime, 49-year-old Heidi Beryl Beyer, Scottsdale, AZ and the two touted investors about a pool of investment funds that would invest in foreign currency exchange (“Forex”). In this post-Great Recession, post-Madoff, post all the flim flams of recent years, Cornett and Beyer didn't bestow upon us an ingenious fraud -- we have no heart-stopping headline or sexy news bulletin. What we got here is -- snore -- another Forex scam. Another Ponzi.
By now, you could probably fill in the blanks. Victimized investors were promised impressive profits from Forex trading. Cornett and Beyer spoke glowingly of the bucks to be made; and in some pitches to investors, this pair actually put the promises in writing via email or the Subscription Agreement that you were asked to sign. By the end of this Ponzi crime spree, more than 150 victims had invested about $14.6 million, resulting in over $10.6 million in losses. Those pilfered dollars went, among other places, to pay off Cornett’s $600,000-plus Las Vegas gambling losses and towards the purchase of a spiffy, new Chevrolet Corvette.
The Wheels Of Justice Turn
In October 2012, Cornett pleaded guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering; Beyer pleaded guilty to one count of wire fraud.
On February 15, 2013, the defendant were sentenced in federal court in Austin, TX. Cornett and Beyer respectively got 40 years and 6 six years in prison with three years of supervised release. Additionally, the pair were jointly and severally ordered to pay $9,525,031.77 in restitution, and Cornett got hit with a further $705,701.62 repayment.
Bill Singer's Comment
Now here’s some background information about Cornett that I’d like to share with you and, honestly, it took me a minute or so to locate these tidbits via a Google search.
FINRA’s public online database, BrokerCheck, informs us that Cornett was employed at Dean Witter Reynolds, Inc. from August 1998 to March 2001, and, thereafter, at Brookstreet Securities from April 2001 to March 2002.
Next, let's pull up a public, online regulatory document from the former National Association of Securities Dealers (the “NASD”), which became the Financial Industry Regulatory Authority (“FINRA”). More precisely, you’re reading a March 2003 NASD Notice to Members (“NTM”). Here’s what you would learn on page 144 of that NASD NTM:
Chris B. Cornett (CRD #3083909, Registered Representative, Waco, Texas) submitted a Letter of Acceptance, Waiver, and Consent in which he was barred from association with any NASD member in any capacity and ordered to pay $28,423.73, plus interest, in restitution to a public customer. Satisfactory proof of payment of restitution must be made before Boyd reassociates with any NASD member. Without admitting or denying the allegations, Cornett consented to the described sanctions and to the entry of findings that he received a $28,423.73 check from a public customer, and, instead of forwarding the check to the customer, he signed the customer’s name on the back of the check, cashed it, and used the funds for his personal benefit without the customer’s authorization, knowledge, or consent. (NASD Case #C06020023)
A Snarky Bill Singer SIDE BAR: Who the hell is the “Boyd” mentioned in the second sentence of the NASD statement? Seems to be a typo. Maybe a remnant of something left over from a cut-and-paste from another NASD case? Not exactly the best job of proofreading by a Wall Street regulator, but, okay, we all make these types of mistakes (yours truly, in particular), so let’s not nit pick too much about a self-regulatory organization’s sloppiness.
The important fact that we learn from that 2003 NASD NTM is that as early as five years before Cornett launched upon his 2008 Forex scam, he had been barred by the NASD and ordered to pay over $28,000 in restitution. Why? Well, it looks like he sort of forged a customer’s signature on a check and then stole the proceeds.
If you put in a few more minutes of online due diligence, you would have learned that when Cornett was touting his Forex trading skills, he wasn't even registered to engage in the proposed Forex pool trading activities, as required by the Commodities Exchange Act and Commodities Futures Trading Commission ("CFTC") regulations. So, a brief bit of online due diligence would have warned you that you had been approached to engage in Forex trading with someone who was not registered to conduct such a business and, worse, had been barred from the securities industry years earlier for fraud and forgery. Ya think that you would have still written out the check for the proposed investment if you knew that? After all, we're talking about nearly $15 million in investments.
Oh, you know, hold on, there's this one last bit of Cornett's background that I also found online. Didn't take me all that much time and effort. Shouldn't have taken any victimized investor all that much time and effort either. On April 30, 2003, the United States District Court for the Western District of Texas sentenced Cornett to a term of imprisonment of 37 months after he pleaded guilty to five counts of bank fraud.
So, who exactly was Cornett at the time he was duping all his Forex Ponzi victims? Well, he was an unregistered, securities-industry barred, former federal prisoner who had been convicted of bank fraud. I mean, seriously -- did anyone do any due diligence on this guy? Anyone ask any questions, get answers, and then verify the assertions?
For more details of this Ponzi scheme, read the Complaint in the CFTC v. Christopher B. Cornett (W.D. TX, February 2, 2012).
READ these "Street Sweeper" columns on FOREX fraud:
- FOREX Ponzi Scammer Hit With Major Prison Sentence
- Feds Say All That Glittered At Gold Coast Futures & Forex Was Not Gold
- Elderly Paraplegic With Dementia And Multiple Sclerosis Victimized In FOREX Hedge Fund Fraud
- FOREX Trading Platform Scam Ends In Guilty Plea
- Botfly LLC's Lewalski Sentenced in Federal FOREX Ponzi Case
- Another FOREX Ponzi Scammer Pleads Guilty
- Feds Go After Another Alleged FOREX Scam
- FOREX Pirate's Ponzi Scheme Ends In U.S. Brig
