Rosemount man charged in $5.5 million Ponzi scheme
Charles Hays' investors thought they were going to earn big money playing the market, but it appears the Rosemount man never put that money toward much more than a very nice boat for himself.
The Commodity Futures Trading Commission on Thursday charged Hays with taking more than $5.5 million from at least three individuals and a charitable foundation in what it describes as a Ponzi Scheme. According to the CFTC Hays spent $4 million of that money on a yacht.
According to court documents Hays, operating as Crossfire Trading, had run his scheme from his Rosemount home since at least January 2006. He told potential investors he day-traded stocks and oil futures and earned a consistent 3 percent return.
Bruce Hendry believed him. According to court documents Hendry learned about Hays three years ago from a friend who said he'd invested his retirement money with Hays. In November of 2007 Hendry met with Hays in the Rosemount man's home and ultimately agreed to invest $2 million of his own money and another $1 million from a family foundation. Four months later he invested another $2 million.
In October of 2008 Hendry asked for and received $30,000 from Hays and in December of 2008 he got account statements that claimed his personal balance was over $5 million and the foundation's balance was more than $1.3 million.
But those accounts apparently never existed. Neither Hays nor Crossfire was registered with the CFTC.
Hendry got concerned about his money late last year and on Dec. 23 he visited Hays' house again. Hays reportedly provided false statements detailing Hendry's accounts. Those statements made it appear Hays had an account with a legitimate brokerage company and were written on that company's letterhead but according to the CFTC that account did not exist.
According to court documents Hays bought his yacht in January of 2008, just months after he received Hendry's first investment.
"Hays ran his Ponzi scheme from his yacht, but was grounded when the tide turned," said Steven J. Obie, CFTC's acting director of enforcement.