The wording in the letter requesting an “urgent business transaction” looked just rough enough to possibly be authentic.
All the way from Nigeria, it arrived unsolicited on the fax machine at the Chicago Board of Trade executive office. In broken English, it promised a $9 million commission to the exchange if it furnished a bank account for an international money transfer. “Be rest assured there is no risk involved on your side,” the letter pledged.
Be rest assured there was risk, Board of Trade brass astutely assumed.
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And, according to federal investigators, they were right. The letter is one of hundreds sent by swindlers from Lagos, Nigeria, the investigators said.
After hearing the first words of the pitch, Assistant U.S. Atty. Jeffrey Kay of Ft. Lauderdale said he recognized it.
“That’s what we call a 419 fraud letter,” said Kay, referring to the number of a section in the Nigerian criminal code that it violates. “Believe it or not, people send these guys money.”
In a typical 419 fraud, the Nigerians ask for help hiding large amounts of money they obtained through overpayments on a government contract. The U.S. companies or individuals are offered a percentage of the take once the funds are transferred out of the country.
But before any cash arrives from Africa, the U.S. recipients receive a request to pay a last-minute fee or tax. Predictably, once they send their money to Nigeria, they never see the payoff. “It’s akin to a boiler-room operation,” said Kay, who has prosecuted some cases. “Anybody who falls for this has really got to be thick.”
Nobody’s that thick at the CBOT, said Chairman Patrick Arbor. “We’re sharpies here,” he joked. “It wasn’t exactly a rush to the fax machine . . . to furnish them with a checking account.”
The letter’s authors didn’t reply to a Tribune fax requesting comment.
More trouble: Among commodity scams, few end as badly as the case of Thomas W. Collins and Lake States Inc. of suburban Rolling Meadows.
The swindle cost investors millions when he disappeared in 1994. He shot himself to death in San Diego last year after police caught him robbing a bank.
Now comes another alleged Ponzi-style scheme–this one lasting 13 years, according to a Commodity Futures Trading Commission complaint.
Beginning in 1984, the year Collins launched his venture, James W. Zollar and his Tech-Comm Limited Partnerships operated an unregistered trading fund that took in more than $13 million.
Zollar, of Apple Valley, Minn., used just $719,000 to trade futures over that period, losing $232,000. He kept $3.6 million for himself, and distributed some $9.2 million to investors in purported profits to keep the scheme going, according to the CFTC complaint.
Zollar is not contesting the CFTC complaint seeking restitution and other measures, his attorney, Douglas Altman, said Monday: “He is cooperating fully.”
Although critics blasted the CFTC for dithering in the Lake States case, the agency said it acted fast on Zollar. “Once we found out about it, we were in court within two or three weeks,” said senior trial attorney Robert Greenwald.
Impending vote: The Board of Trade’s plan to save money by switching its evening trading session from open outcry to its Project A electronic system faces a membership vote Dec. 18. It won’t be unanimous.
The exchange board is so anxious to be rid of night trading it moved up the date of the shutdown to Jan. 29 from April 2, but Jake Morowitz of USA Trading, for one, objects to the idea.
Switching to an electronic computer system during the off hours sets a bad precedent, Morowitz said: “It’s a horrible mistake. Open outcry provides better liquidity and depth of a marketplace than any electronic system.”