Forex Investors May Face $1 Billion Loss as Trade Site Vanishes

Jaren Mark, a Florida doctor, says he monitored Secure's website for nine months before investing

The first time Rajibuddin Mandal, a family doctor in Birmingham, England, tried his hand at trading currencies online, he lost 2,000 British pounds. From that experience, he concluded that the foreign-exchange market was too big, too complex and too hazardous for amateur investors like himself. He decided he needed help from the professionals.

One site he found on the Internet in early 2013 seemed to be speaking directly to him. Called secureinvestment.com, the website acknowledged that currency trading was risky.

“Ninety percent of traders in forex end up losing money,” it said. Secure Investment said it offered something safer: It made trading decisions for investors and guaranteed their principal. That meant, Mandal thought, that even if he didn’t make money, the worst that could happen would be that he would break even, Bloomberg Markets will report in its December issue.

Secure Investment said that it traded in excess of $4.8 billion daily for more than 100,000 investors in 140 countries. The company said it posted all of its trades every day, showing which ones were winners and which were losers. The site said investors had averaged net gains of 1 percent each trading day during the past five years.

Mandal viewed video testimonials by satisfied customers, including one who said he had watched his investment grow for years, preparing him for a stress-free retirement.

Over three months, Mandal, 41, says he carefully followed Secure Investment’s trading results on its website.

“There was nothing that I saw that led me to believe there could be any kind of problem,” he says.

The site said that those average gains of 1 percent daily couldn’t be compounded into an annual return. Even without compounding, those kinds of daily returns would amount to an annual gain of about 250 percent -- or more than 25 times the average annual return of the Standard & Poor’s 500 Index, with dividends reinvested, for the past 50 years. Secure Investment didn’t provide that kind of context.

In May and June last year, Mandal and his wife, Wasima, 37, also a physician, invested $30,000 each with Secure, which required customers to use U.S. dollars. The Mandals swapped pounds for $60,000, using a bank. Following instructions from Secure, they then wired the money to banks in Australia and Cyprus to open their accounts.

Logging into the company’s website regularly, they watched as Secure traded the dollar versus the euro. Secure’s website showed that their accounts had soared in value to a total of $245,000 -- a fourfold increase -- in just 10 months.

Mandal says he decided to withdraw some money in March. In an e-mailed response, Secure said he’d have to wait. It cited issues with the U.S. Foreign Account Tax Compliance Act, which is a Treasury Department rule that applies to U.S. citizens using foreign accounts -- a law that was irrelevant to Mandal, who’s a U.K. citizen. The March 5 e-mail said Mandal would get the money in a few days.

“Thank you for your patience,” it said.

Mandal says he wasn’t yet suspicious. He got another e-mail from Secure on April 30.

“Our Technical Department is currently working on system updates,” it said. “Our company sincerely apologizes for any temporary glitches that may occur.”

The next day, the website went offline. It never returned. Neither did the Mandals’ investment. As far as he knows, their entire $60,000 has disappeared forever.

“Every day, I saw they were making me profits,” Mandal says. “And then it’s suddenly gone. It gave me psychological pain and stress. I feel very embarrassed.”

If their money is lost for good, then the Mandals may have plenty of company. Investors around the world may have lost more than $1 billion, based on data posted on Secure’s website and viewed by Bloomberg Markets two months before the site shut down.

“This type of forex fraud is an assault on the international financial system -- victimizing investors in multiple countries while concealing where the wrongdoing took place,” says U.S. Senator Carl Levin, who is chairman of the Permanent Subcommittee on Investigations and became aware of Secure Investment when asked about it by Bloomberg Markets.

Customers in 11 countries on five continents say they have seen their money evaporate with Secure. Twenty-five investors interviewed say Secure, which was incorporated in Panama in 2008, had instructed them to wire money to banks in Australia, Cyprus, Latvia and Poland.

The company’s website provided an explanation: “From time to time, Secure Investment may change bank account information, because it chooses the financial partner that currently offers more profitable cooperation conditions.”

Secure never revealed its true location and provided its clients with only some bank and related-company names, along with its call center’s toll-free phone numbers in Australia, Canada, Hong Kong, the U.K. and the U.S.

Secure Investment lured customers by creating its own good reputation and by publishing a seemingly successful trading record on its elaborate website. It was all a lie. The company’s claims to have offices and a large staff were also false. At least some of its so-called customer testimonials were actually delivered by actors.

The deception worked -- for a while. In March, Secure’s website was more popular than Forex.com, run by Gain Captial Holding Inc., the second-largest U.S.-based, over-the-counter forex trading firm, according to Alexa.com, a unit of Amazon.com Inc. that tracks page views of millions of websites.

The most common search sending traffic to Secure was the phrase “secure investment.” The average visitor to Secure’s site stayed for almost seven minutes and viewed seven pages, according to Alexa.