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Hanover Stevens founder guilty of fraud
Atlanta Business Chronicle
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The founder of an Atlanta-based foreign exchange brokerage firm pleaded guilt Monday to defrauding clients out of nearly $2 million in a Ponzi scheme.
Carlin Selwyn King, 42, of Atlanta, is the founder and principal of Hanover Stevens LLC. King was a professional securities broker who traded equity stocks and commodities for clients at various financial firms, mostly in Atlanta, since the 1990's. In approximately 2002, King founded and began operating Hanover Stevens, a retail foreign exchange brokerage firm.
But in February 2006, he began running what amounted to a fraudulent Ponzi scheme through December 2007, defrauding the firm’s investments clients of almost $2 million. King stopped actually investing client money in foreign exchange transactions and began lying to clients about the returns their investments were supposedly making. Instead of investing client money in the foreign currency markets, as promised, King would instead use those funds to pay Hanover Stevens’ increasing operating expenses, pay investors who asked for distributions and pay substantial personal expenses (including living expenses at luxury hotels).
King would then provide account statements to his investors containing fabricated numbers as to the balances in their accounts and supposed investment gains. Because there were no actual investment gains and because the balances being reported to investors were fabricated, the only way that King could pay requested distributions was to use newly-invested funds.
Investor losses by December 2007 totaled close to $2 million.
King was charged with one count of wire fraud relating to the entire two-year scheme. He faces a maximum sentence of 20 years in prison and a fine of up to $250,000.
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