Razor FX Fraud/Scam

Some of you might have read in the news today that a man named Michael Richard MacCaull was arrested on Tuesday on charges of fraud. Here is the full story.

http://biz.yahoo.com/ap/080115/forei...scam.html?.v=1

Unfortunately I am one of the victims of this scam. I was not dealing directly with razor fx but rather with an introducing type company called Horizon FX (HFX) that is based here in Vancouver B.C. At this point I have no reason to believe that HFX had anything to do with the fraud and it seems that they were victims as well. This was a managed fund where they did all the trades (Razor FX did). Every week we received statements of the trades they had done in the week and it averaged about 1% per week. All seemed very well with consistent and conservative gains. Most weeks were up and a few were in the negative.

Prior to using this managed fund, I was VERY skeptical. The return was very good and since at that point I did not know too much about forex I thought that it was too good to be true. The owner of HFX is a personal contact who had been doing this for a few years. To make a long story short(er) I ended up giving them my money about 7 months ago. The investment was very liquid in that I was able to withdraw money at any time and ofcourse deposit at any time. Well, in the end I had a significant amount of money invested with them (atleast for me) and I have no idea if I will get anything back. I am usually a skeptical person, but Im just glad that the world is filled with bigger skeptics then I am, who did not follow my suggestion when I told them it is a good investment.

Back in November of last year, for some reason I started feeling very uncomfortable with them having my money since I was afraid of this EXACT scenario. I seriously considered pulling out all my investment, but decided instead to first learn forex on my own. Understand it very well then when the time was right take it out and invest part of it on my own. I should clarify that there were no actual reasons that made me want to take my money out, it was solely a GUT feeling.

Its too late for that now... What is absolutely nuts about this whole thing is that every statement and every trade they had sent us was FAKE. They didnt do any trading... The 0.4% one week, the 2.3% the next were all fake. Quite disturbing really... Further, this a**hole has done this before and I was shocked to find out that in 2002 he served 15 months in prison for a previous securities fraud conviction! How he was able to do this again especially after being on "supervised release" after his jail sentence absolutely baffles me. Did it take the Aston Martin he was driving and not the Masarati he had before that, to get notice from the feds?? Mind you this guy is 36 years old now and in his first scam he was in his mid 20s...

Although this is quite difficult to handle I believe there is something positive (atleast I hope will prove to be) from this experience. Without getting involved with HFX I probably would have not been exposed to forex, atleast not any time soon. I am not discouraged from forex itself, but rather more motivated to learn it and become very good at. Dont need the huge returns, just good and consistent returns.

As for the lessons learned? well thats a tough one. Unfortunately this experience does show that this world (as we all already know ofcourse), is filled with snakes and liars. Who can you really trust anymore? Can all these companies go belly up? Run away with our money? Is there a better way than the current method of handing over our money to some party? Is there ANY protection for us?

Although I knew everything about HFX, it was disclosed that they had another company doing that trading, but the identity of the company and its principles was their secret. From now on, I must know EXACTLY who I am dealing with, all the parties involved. Only go with the Big boys... Not just in terms of the size of their wallet but their name/reputation AND size of their wallet. From now on I will only deal with the "household" names in the industry. It does put a negative light on the whole industry though since until there is some regulation (even with it really) I will always have my doubts about the brokers. In my opinion, the best thing for this industry is if the big banks get involved.

So now Im dealing with this waiting to see what will happen next. I pray that I will get atleast some portion of my investment back. Im wondering if being in Canada will have less priority than other people from the United States.

Im wondering if anyone else on these boards was dealing with any of these two companies. Also anyone with experience in these matters care to give any advice?

Again, I would like to reiterate that at this point it does not seem that HFX was involved in the scam.

Best of luck to you araouf & all the others invested with HFX. I was told HFX had ~$32m invested, which is a suprisingly large share of the $68m total deposits.

Thankfully the recent CTO saved a lot of people from possibly losing more with HFX.

Thanks Grant, I appreciate it. You are right the cease trade did save a lot of people from entering and I probably would have added more if it was not in place. I did read somewhere else a very good point though. The cease trade was probably the cause of all of this collapsing. Because of the cease trade, a lot less money was coming in, since new accounts and adding additional money was not allowed. At the same time there was probably an influx of money coming out from those who were uncomfortable with the cease trade. Then there were the normal withdrawals.

So with more money going out then in and ofcourse the scammers own spending, the entire thing collapsed.

There is still a lot of information I want to find out. When did the investigation of RazorFX start? Where the Canadian authorities aware? And more importantly am I going to get anything back?? I wouldve much rather have blown my account the old fashioned way, by trading on my own!

Yes it looks like the BCSC did the right thing demanding greater scrutiny of the offering, although too bad for investors they didn't do so with the initial offering.

Perhaps the BCSC was aware of the investigation, that may explain why the CTO was not lifted after 3 months despite HFX always saying it would be "soon".

Unfortunately this article implies there's a very slim chance that very much of people's initial investments were recovered. If RazorFX didn't have even $10m of the original $68m invested, that means at least 85% of the money was gone.

The point that also baffles me is how an ex finance crook convict can do financial business just after going out of jail.

Wasn't he supposed to be checked from time to time by the authority ?

They didn't watch him very closely. Nothing on any adverts or website linked him to the company but his lifestyle alone should have tipped off the authorities.
It's a jungle out there.

Checked for what? Do you know if he was on any probation? Do you know if there was any stipulation by the courts whereas he was not to be involved in any transactions involving the stock market or foreign currency exchange?

There was an article in the Wall Street Journal a few days ago stating MacCaul was forbidden from engaging in any investment or financial enterprises. Consequently his name won't be found on the RazorFx website.


The OP's link is an article stating MacCaull was barred from working in the securities industry after his first conviction.

If you google RazorFX MacCaull you'll find updated articles--one from Forbes stating he was doing this from jail and while under supervised release. He also violated terms of release awhile back and had 18 months added to original 3 years of parole. Sorry I couldn't upload the articles.

i did not had the time to respond but Billflet did. I'll try to find the article again stating that he was indeed supervised.

No need to look for it, my friend BillFlet answered the question.

He was also driving an Aston Martin--some guys just beg to get caught. I just feel bad for Araouf and everyone else who contributed to this guy's lavish lifestyle. I hope they let him out of jail quickly so he can hurry up and earn his third felony. He won't be much of a threat then.

WH, did you take the aerial photo of your property?

Habitual offender law. I could tell you some stories.

The pic is from Google Earth. I have Google Earth Pro version. I am awaiting word about the property to the west of the circled area. This will be up for sale in the near future. Nice 182 acre property.

Have a great weekend my friend!

This is the type of person that has ZERO remorse or conscience. If released he will do it again, take people's money so that he can ride around town in a nice car. That is why I hope he gets a long long sentence. He deserves the maximum of 20 years.

Here is one of the articles that says how he was still doing this while in prison and on his 3 year supervised release.

http://www.forbes.com/reuters/feeds/...-UPDATE-1.html

I have to say that whomever was doing the supervising did a poor, poor job. His lifestyle should have definitely raised some flags. As already mentioned he was barred from trading in securities but since Forex is unregulated, it was a simple alternative. It is a shame that he was able to do this again.

Although his prison sentence had to do with securities, it seems that this is the 2nd case of fraud to do with Forex. I found this article written in 1999 where it talks about him being a principle in another forex company which took place after he was already barred from securities. The SAME exact scheme. I dont know what the final result of that was though.

http://www.businessweek.com/1999/99_33/b3642144.htm

Hi Grant, do you know someone who invested with HFX or where you an investor? You can pm me if you prefer. Thanks

Hi araouf, I have a very similar story. I too was skeptical of Horizon's profits and started learning about the forex market. They said their traders traded on the news and used 20:1 leverage. After reading many forex forums and seeing the charts myself I thought it was plausible a savvy news trader could do well enough to deliver these kinds of profits to investors.

In the end I cautiously invested (not cautiously enough obviously) but thankfully not more than I could afford to lose. In the meantime I started practice trading in the hopes I could earn similar profits myself someday. Those hopes have been significantly dashed now. I wonder if it really is possible to average even a .5% profit a week or if everyone who claims these kinds of profits is lying. At 10:1 leverage that's only 5 pips a week so doesn't seem far fetched to me. I'd appreciate the opinion of any experienced traders here.

Anyways I wanted to let you and anyone else caught up in this know that there is a group for victims to keep get in touch with one another:

http://groups.yahoo.com/group/fxvictims/

Corey

araouf, i spoke to a few investors as well as invested myself.

Corey, the HFX disclosure document I received a "minimum margin of $6,950u.s. per $100,000 contract" which translates into approximately 14.3:1 margin.

I agree that the claimed results are not ridiculous considering the leverage available... however, you also see a lot of smart people on this board struggle to make very modest profit, so it's probably healthy that your hopes have been adjusted a little bit.

I lost 35k in this investment. I suggested this investment to friends and they invested another 300k. The head of Horizon FX is completely at fault. This guy may not be a crook but he's a moron. How do you open a marketing company, invest everyone you knows money without doing an ounce of research on the trader himself? Are you kidding me? He should go to jail for ignorance.

Don't mean to defend him, but there's possibility that he just human. Meaning: when somebody offer him a seemingly legitimate business investment with good return, lack of experience, living expenses, and good dream of a good future make him careless.

Nobody likes to lose money but how can you blame Gem and Horizon? Because he didnt do his due diligence on Razor fx. He obviously didnt . Dont we as investors/traders take personal responsibility for our actions whatever the outcome?

Its always the same deal some super duper investment that returns big numbers and people fall for it every time.


And it will happen again...because...Greed is a powerful emotion

So you call him a moron for not doing "an ounce of research".

What do you call yourself, recommending a company without confirming the owner has done an "ounce of research"?

Do your friends feel that you belong in jail for what you did?

I think you are beng understandably, but unfairly, harsh because of your loss.