Premium Income Corp., InForex Ltd., Tri-Forex International Ltd., also known as Tri-Forex, Ltd. and International Forex Company, Gerald Leo Rogers, also known as Jay Rogers and Jay Rodgers, and Alexander Igor Shevchenko
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20235 / August 9, 2007
SEC v. Premium Income Corp., InForex Ltd., Tri-Forex International Ltd., also known as Tri-Forex, Ltd. and International Forex Company, Gerald Leo Rogers, also known as Jay Rogers and Jay Rodgers, and Alexander Igor Shevchenko, Civil Action No. 3-05-CV-0415-M (U.S.D.C./N.D. Texas, Dallas Division)
Court Grants Summary Judgment Against Creator and Principal of Fraudulent Foreign Currency Option Scheme
On August 1, 2007, the Honorable Jane Boyle, United States District Judge, Northern District of Texas, issued an order granting the Commission's Motion for Summary Judgment against Defendant Gerald Leo Rogers ("Rogers"), the architect of a fraudulent Ponzi scheme that collected more than $11 million from over 100 investors, many elderly or investing retirement savings. The Court permanently enjoined Rogers from future violations of the securities registration and anti-fraud provisions of the federal securities laws. The Court also ordered Rogers to pay disgorgement in the amount of $10,959,000, plus prejudgment interest, and imposed a civil penalty of $120,000.
In its Complaint, filed on March 3, 2005, the Commission alleged that Rogers, a twice-convicted felon, whose criminal and securities fraud history spans nearly four decades, started this scheme shortly after being paroled from a 35-year prison sentence for mail and securities fraud. The Commission alleged that from January 2004 through the present, Rogers and the other defendants, operating principally through Premium Income Corp. ("PIC") engaged in a deliberate scheme to defraud investors with promises of "guaranteed profits" and "safety of principal." The complaint alleged that the defendants falsely claimed that PIC would use "100% of investor funds" to write covered call options in the foreign currency market. In fact, according to the complaint, the defendants operated a "Ponzi" scheme, using new investor funds to pay "interest" to earlier investors, and made undisclosed payments to Rogers and PIC salesmen. Based on evidence presented to the Court on March 3, 2005, Judge Boyle granted the Commission's request for a temporary restraining order, the appointment of a Receiver, an asset freeze and other equitable relief to halt the ongoing scheme
In her order granting summary judgment, Judge Boyle concluded that the Commission established that there was no genuine issue of material fact that: (1) the PIC foreign currency program was a security; (2) Rogers recruited and trained 140 sales agents to offer and sell the security and encouraged them to disseminate false and misleading information about the PIC investment; (3) Rogers and his sales force materially misrepresented the risks involved in covered call options; (4) Rogers falsely touted his credentials and experience in legitimate international commerce, while failing to disclose to the sales agent or investors his long history of criminal convictions and regulatory injunctions; (5) Rogers, in fact, did not use investor funds to write covered calls, but rather risked investor funds in speculative foreign currency trade, resulting in the loss of millions of dollars; and (6) PIC operated as a Ponzi scheme, using funds supplied by new investors to pay the monthly returns promised to existing investors.
On January 18, 2007, the Court issued final judgments against PIC, Inforex Ltd. and Tri-Forex International, Ltd., based on their failure to appear or otherwise defendant the case. The Court's summary judgment against Rogers should clear the way for the Court-appointed Receiver to petition the Court to distribute Receivership funds to the victims of the fraud.
The Commission acknowledges the assistance and cooperation of the Texas State Securities Board and the Commodity Futures Trading Commission in this matter.
For additional information, please see Litigation Release No. LR-19115 (March 3, 2005).