Sep. 10–Donald C. O’Neill raised $13.7 million through a fraudulent foreign currency investment scheme and then spent much of it on personal indulgences, federal authorities charge.
The FBI is looking for the former Lighthouse Point resident who used the money on three luxury homes in South Florida, a BMW, a gambling trip to Las Vegas, golf club memberships, jewelry and custom-made suits.
O’Neill’s operations were detailed Tuesday as the government unsealed a 40-count indictment charging him with mail fraud, wire fraud and money laundering.
O’Neill, 32, attracted more than 38 investors — some from South Florida — through cold calls, website advertising, presentations at conferences and referrals, the government alleges.
He was purportedly in the hedge-fund management business and ran funds from offices in downtown Fort Lauderdale. Hedge funds are loosely regulated investment pools. Among his businesses names were Frecom Currency Traders Group, Momentum Trading Group, Orca Funds and NDT Fund.
O’Neill told people their money would be put into foreign currency investments and stocks, the government alleges. He talked about double-digit returns for months in which no trades actually were made or when he had losses.
Of the $13.7 million collected from January 2001 to September 2002, O’Neill misappropriated at least $10 million for personal expenses, the indictment alleges.
He used about $700,000 from some investors to pay others, “thereby creating a false sense of security among investors that their money was safe,” the government said. He also used at least $2.7 million to pay business expenses such as salaries and rent.
Charges in the Department of Justice’s criminal case mirror those made in a civil suit filed last September in Miami by the Commodity Futures Trading Commission against O’Neill and his companies. The CFTC said O’Neill has never been registered with the commission.
The agency also pointed out:
— Overall trading losses were $487,000.
— On the Las Vegas trips, O’Neill was “accompanied by business colleagues and a high-priced call girl,” and gambling losses exceeded $800,000.
— He made a down payment of $1 million on a $3 million house in “the exclusive Lighthouse Point neighborhood.” (Locations of the other homes were not available.)
What’s more, the CFTC said, “among the customers whose investments were stolen to feed O’Neill’s wastrel lifestyle were . . . two tribes of Native Americans.” The Hopi Tribal Housing Authority in New Mexico and the Fort Mojave tribe in Arizona invested a total of nearly $10 million in Orca funds.
The CFTC obtained a preliminary injunction against O’Neill, who neither admitted to nor denied the charges.
O’Neill’s initial attorneys in the CFTC case could not be reached.
They filed a motion to withdraw from the case in February, saying O’Neill didn’t stay in touch or follow their advice. In addition, they said, they were owed more than $10,000.
If convicted in the criminal case, O’Neill faces scores of years of possible jail time and fines of $250,000 on the mail fraud and wire fraud counts and $500,000 on the money laundering charges.
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