FXDirectConnect LLC Liquidity Scam

NextGen4FX

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We have been doing business with SpartanFX (TradeForexOffshore.com) for well over a year. Starting a few months ago we began seeing anomalies on their MT4 platform, such as the platform disconnecting when the markets were volatile (only after you entered a position), gaps in the charts which would appear after the disconnect, and orders running through take profits and stop loss entries without closing the order out. Funny enough that when the market had gone through some of our TP zones and did not close, the market would move against us only on SpartanFX’s platform and close out our position at a loss. These anomalies were not present on any other broker we are dealing with. There have been several occasions where these anomalies occurred at the expense of clients.

SpartanFX is well aware of the problem and have been promised several times by the liquidity provider, FXDirectConnect LLC of Fort Lauderdale, Florida, that these issues would be resolved. We had an issue in early September in which one of our traders was trading a client account and the MT4 platform became 100% non-responsive. The positions opened on the account were high risk at the client’s request. Our trader saw that the market was moving away from his position and attempted to exit but was unable to. The trades continued to move against the trader, even going through the designated SL values and beyond. The account was wiped out in the matter of hours while the trader possessed no ability to close trades on the account. Support at SpartanFX was contacted and they immediately began working on the issue. While we were on the phone with support, the representative for FXDirectConnect LLC called SpartanFX and informed them that there was a problem and their DNS servers went offline.

SpartanFX told Vern Hedquist (FXDirectConnect LLC representative) what happened and that the client’s account was wiped out due to this malfunction. At that time Mr. Hedquist denied that the platform had any issues that would cause that issue. David, the support manager of SpartanFX was certain this was not the case and informed FXDirectConnect LLC that they needed to reimburse the client for the loss. The trades we had open on the account at the time would have taken a loss of a few hundred dollars if the stop loss had functioned properly, or if our trader had had access to intervene on the trades. After David spoke with Vern about this several times over the course of a week, Vern agreed on a scenario in which SpartanFX, NextGen4FX and FXDC LLC would split the cost and reimburse the client, which amounted to $1,633 per party to make the client whole. Our staff found it odd that a liquidity provider would not reimburse a client on a malfunction such as this. After this arrangement was made, NextGen4FX and SpartanFX deposited funds into the client account but FXDC had not yet made the deposit. In fact, they never did. SpartanFX ended up crediting the client account with the remaining balance and once again trading resumed.

Since that time, our trader who was managing that account has not traded on the SpartanFX platform as he informed us that he would never again trade on that platform. Since that time, we have only run EAs trading those accounts alongside another trader at all times. There have been several issues since that time where again FXDC LLC failed to provide any support on the issues. In another incident just under a month ago, one our EAs that was set to trade at 0.50 lots MAXIMUM was trading an account and we received a call from our client informing us that there are “weird” trades on his account. This client has been trading with us for almost two years. I went over to look at the clients account and there were two trades active and the lot amounts were set at over 6 lots per trade. During our history, we have never witnessed this with our EA that we had running. I also took note of the SL, TP values and time stamps on the trades and called SpartanFX. The trades were closed out immediately as a loss, but a strikingly odd matter was that when the trades were closed, the SL and TP values were not present in the account history. Also noting the time stamps, it was also noted the next day that the time stamps on the trades were altered and were changed to 1 hour before the trades had actually closed. The saga continues...

SpartanFX credited the clients account for the loss after receiving no support from FXDC LLC. Vern Hedquist dodged every attempt to try and communicate with him. During times in which we experienced platform issues, we were told by Vern to use a support ticket system through their SAT platform (a Java-based web platform). This was also done several times previously in which no reply was ever received on those tickets. This was also brought up on a later call with Vern and David from SpartanFX. Vern said there must be something wrong with the ticketing system and they would look into it. There was never any reply and it does not appear that the ticketing system is operational to this date. SAT is FXDC LLC’s self-developed platform. Prior to them bridging this software to their MT4 platform, there had been no issues with MT4 at all.

Our traders have been on break since December 11, 2012. Since that time, there have been no active trades on our personally managed accounts. Then just last week we realized that our account that we have monitored with FPA was completely blown out. Again, none of our traders were trading the account, and the account had no EAs installed, then or ever. There should have been zero activity. David from SpartanFX was called once again, and we began looking into the issue. It seems that our account (which is a multi-account PAMM) was the only account that was affected by this – which is impossible due to the other accounts being attached. David was also aware that we were waiting on a payment before more trading was to take place. FXDC LLC failed to send these funds to SpartanFX so they could send us the payment due – another reason trading was not taking place. Vern was contacted; he provided a statement saying that the trades that took place on the account were done from a VPS based in Pennsylvania (we do not have any in PA) and an IP in Pakistan. Vern also stated that it appeared that there were two EAs loaded on that account, an account that was manually traded with no EAs. The VPS we often use is well known to SpartanFX, since some of their client accounts trade on that same VPS, and it is located in Canada. However, the account in question has never been traded from an MT4 terminal running on a VPS, and – once more – has never had an EA loaded. David from SpartanFX knew at this point there was something wrong. The information provided even differed from their admin logs for SpartanFX.

SpartanFX called on all their clients to immediately cease all trading activity as client withdrawal requests were not being honored by the liquidity FXDC LLC. SpartanFX had also recently sent FXDC LLC a $25,000 wire to augment the client trading account; in return an indentical amount FXDC LLC was supposed to remitted to SpartanFX in partial payment for cummulative commissions earned (and owed by FXDC to SpartanFX). The funds were effectively meant to be turned around and returned to SparfanFX. These funds have not been sent to SpartanFX. Instead Vern told SpartanFX that there were “issues” with their bank account and it was temporarily frozen, or, alternatively, that the account was under suspicion and that any large transaction could be scrutinized and possibly held up. The reality of the situation is quite simple: every time that funds have been requested, the request has not been honored; rather, an excuse is all that has been provided for why it was not. And, every time an issue arose with a client account, FXDC LLC (specifically Vern Hedquist) would either reject responsibility, or acknowledge there was an issue but deny any restitution to the client. Any and all compensation to clients for losses were made by SpartanFX and NextGen4FX. We are still waiting for funds to be processed almost a month in waiting.

What we have found:

Our research on FXDirectConnect LLC finds that they are an LLC based in Fort Lauderdale Florida. Vern Hedquist without fail cited Frank Conlin as the mastermind and ultimate puller of strings behind FXDirectConnect. Yet, the filing for the Florida based company cites only one officer and makes no mention of Frank Conlin. I have attached their filings in PDF format. The listing below is taken from the Florida Secretary of State website. It is the corporation filing for FXDC LLC and their other operations. The operation is listed under two different corporations, FX Direct Connect LLC and FX Direct Trade LLC which both are registered to the same address, and both websites are about the same exact product. The managers of these operations are also different but in each case, Vern Hedquist is the person that answers the phone. Even Frank Conlin of whom Vern has stated several times has dodged any attempt in contacting him.

FX Direct Trade LLC
17 South Forth Lauderdale Beach BLVD
Suite R300
Fort Lauderdale, FL 33316
FX Direct Connect | Home Page
Managing Members:
Hedquist, Vern C
1314 E Las Olas BLVD Suite 14
Fort Lauderdale, FL 33316

FX Direct Connect LLC
1314 East Olas BLVD
Suite 14
FT Lauderdale, FL 33316
Managing Members:
Aulicino, Vincent J
1314 East Las Olas BLVD Suite 14
Fort Lauderdale, FL 33301

All attempts to find information on Vincent Aulicino have drawn blanks, including contacting the company and asking for him. Thus Mr. Aulicino may be fictitious person or a pseudonym.

The addresses for both LLCs are identical. Vern also lists himself as a registered agent for the FX Direct Trade LLC. He is not a resident of Florida so he would be required to buy a registered agent service.

We also took the time of conduct some background research on Vern Hedquist and Frank Conlin. Vern Hedquist and Frank Conlin were involved with the Global One scam that took place a few years ago. This involved a trader, Rick Young, who is currently serving a prison sentence for, misleading and misappropriating client money. Vern and Frank were able to evade prosecution in this case but after review of public records which identify witnesses for the defense and the prosecution that are not under witness protection, Vern and Frank were not listed as witnesses for the prosecution. This forum has converage of the Global One scam.

FX Direct Connect LLC, Vern Hedquist and the evasive Frank Conlin (whose involvement has been alleged, and we presume this to be the case, but it has not been proven) appear to be offering deceptive brokerage labels to again play with client money. Vern: If you read this, please threaten me with a lawyer. I will be more than happy to see you in court. It seems that the liquidity bridge they have provided to SpartanFX is run with one primary objective: Insuring that any client attached loses their equity. SpartanFX and a few professionals (which wish to remain anonymous) that have examined the feed provided by FX Direct Connect LLC seem to come to a conclusion that there may not be a real price feed with actual liquidity providers of any sort behind it at all. FX Direct Connect has also failed to provide any client funds to SpartanFX following a formal request and demand for such two weeks ago.

The litany of excuses made by Vern, whose recurrent theme will be readily discerned, include: “I haven't been able to get ahold of Frank”; “The tech team went out to check on Frank since we haven’t heard from him in days; they found Frank very sick and made him some food” (must be one heck of a tech team); “We have to talk to Frank first”; and so on. Apparently we have a company listed under Vern Hedquist’s name while his liability seems to critically depend on someone that is not even listed on the corporation at all? I know some companies do not list all their officers, but in the case that involves liabilities such as this, why would Frank Conlin not be listed – if he is actually involved to the degree implied?

Also, we looked up FX Direct Connect LLC and FX Direct Trade LLC on the NFA’s website and found they are not registered with the NFA. Vern Hedquist and Frank Conlin were previously registered until February of 2012, when the Dodd Frank law took effect. Their NFA memberships were both withdrawn. As they are operating within the US, they are required to be filed with the NFA/CFTC for providing these services. Their status on the NFA site cannot be viewed unless you look their names up specifically.

HEDQUIST, VERNON 0426162 NO CURRENT STATUS
FX DIRECT ADVISORS LLC
• PRINCIPAL WITHDRAWN 05/09/2012
• FOREX ASSOCIATED PERSON WITHDRAWN 05/09/2012
• NFA ASSOCIATE MEMBER WITHDRAWN 05/09/2012
• ASSOCIATED PERSON WITHDRAWN 05/09/2012
• FOREX ASSOCIATED PERSON APPROVED 07/07/2011
• NFA ASSOCIATE MEMBER APPROVED 07/07/2011
• ASSOCIATED PERSON REGISTERED 07/07/2011
• PRINCIPAL APPROVED 05/09/2011
• FOREX ASSOCIATED PERSON PENDING 05/09/2011
• NFA ASSOCIATE MEMBER PENDING 05/09/2011
• ASSOCIATED PERSON PENDING 05/09/2011

FX DIRECT TRADE LLC
• PRINCIPAL WITHDRAWN 05/10/2012
• NFA ASSOCIATE MEMBER WITHDRAWN 05/10/2012
• ASSOCIATED PERSON WITHDRAWN 05/10/2012
• FOREX ASSOCIATED PERSON WITHDRAWN 05/10/2012
• FOREX ASSOCIATED PERSON APPROVED 08/25/2011
• NFA ASSOCIATE MEMBER APPROVED 08/25/2011
• ASSOCIATED PERSON REGISTERED 08/25/2011
• FOREX ASSOCIATED PERSON PENDING 07/08/2011
• NFA ASSOCIATE MEMBER PENDING 07/08/2011
• ASSOCIATED PERSON PENDING 07/08/2011
• ASSOCIATED PERSON PENDING STATUS WITHDRAWN 07/07/2011
• FOREX ASSOCIATED PERSON PENDING STATUS WITHDRAWN 07/07/2011
• NFA ASSOCIATE MEMBER PENDING STATUS WITHDRAWN 07/07/2011
• PRINCIPAL APPROVED 02/10/2011
• ASSOCIATED PERSON PENDING 11/18/2010
• FOREX ASSOCIATED PERSON PENDING 11/18/2010
• NFA ASSOCIATE MEMBER PENDING 11/18/2010
• PRINCIPAL PENDING 11/18/2010

CONLIN, FRANK 0045434 NO CURRENT STATUS
Status Effective Date
• KIDDER PEABODY & CO INCORPORATED
• ASSOCIATED PERSON WITHDRAWN 01/28/1995
• NFA ASSOCIATE MEMBER WITHDRAWN 01/28/1995
• NFA ASSOCIATE MEMBER APPROVED 08/01/1985
• PRINCIPAL WITHDRAWN 06/28/1983
• ASSOCIATED PERSON REGISTERED 06/28/1983
• PRINCIPAL APPROVED 06/28/1983
UBS FINANCIAL SERVICES INC
• ASSOCIATED PERSON WITHDRAWN 07/08/1996
• NFA ASSOCIATE MEMBER WITHDRAWN 07/08/1996
• ASSOCIATED PERSON REGISTERED 01/28/1995
• NFA ASSOCIATE MEMBER APPROVED 01/28/1995
 

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Pharaoh

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Looks like I don't need to say "please give more details" on this one. :)

Have you contacted the NFA, CFTC, SEC, and IC3 yet?
 

NextGen4FX

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Hello Pharaoh,

The paperwork is being filed with the CFTC today as a formal complaint. I was just on the phone with them getting the complete process to file a complaint. We are just waiting on some of our clients to respond to our email to have them send us a written statement to send along with it. This way, everything is filed all at once and our clients are taken care of.
 

NextGen4FX

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Received a reply by phone from the SEC after they received our Email and FAX on Friday. Apparently the SEC does not have anything to do with Forex liquidity and they called it "the grey area" of the law that really has no regulation. They said that if we believe a fraud was committed, the CFTC would be fronting that. I was told that the complaint would still be filed just in case.

The NFA also replied already which they told us that since their NFA membership was withdrawn, there is nothing they can really do since the only thing they can threaten them with is to revoke their NFA membership or have them shut down. Only if they are NFA members.

Waiting on replies from the CFTC and the FBI. The FBI office down in Florida was contacted directly in this matter and I was told they are going to send someone to verify that the address is in fact an address of business/physical office.
 
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The facts reported previously are accurate in all their essentials. We are supplying the background information below for context and exposition.

Besides standard feed, bridge and platform support services, FXDT LLC also supplied an alternative forex trading platform, SAT, which some SpartanFX clients preferred to the industry standard MT4, and a superior back office accounting module versus that provided in the MT4 package. This accounting functionality was a particularly attractive element of the package. Ongoing updates and improvements were provided for virtually the whole length of
our relationship with FXDT. Had FXDT chosen a business plan which did not (apparently) involve misappropriating funds entrusted to them, they had a promising service. In other hands the software may have substantial value.

The feed and/or platform issues discussed – it is not always simple to disambiguate which source is behind an observed issue at the trader/client level – started cropping up after several months of service provision by FXDT, and were confined almost exlusively to the traders in the group whose representative made the original post above. After the initial incident in September there were no more major issues, at least as measured by trading losses, for another two months, although the feed and platform were now under suspicion. It would seem that the trading patterns and position sizes characteristic to this trading group were particularly susceptible to manipulation and exploitation by FXDT or their unidentified partners.

The last trading incident reported, involving an account where the trader was not trading it and where there were no EAs installed, yet a position which ultimately wiped out the account was mysteriously initiated, occurred after weeks of FXDT failing to remit requested funds. Had the trade been genuine it would have had the favorable effect, from FXDT’s perspective, of reducing the size of their liability to SpartanFX clients. Just a coincidence? Readers can guess for themselves; our intution is that the probability of this randomly happening when it did is pretty low.

Restitution from FXDT for unremitted client and SpartanFX company funds owed will be pursued. If it transpires that the feed provided by FXDT was a demo feed, and this cannot be ruled out, with no funds actually risked or changing hands on account of trading, then SpartanFX will demand that gross client deposits made be refunded in their entirety. Until such restitution is made, our company revenues earned beyond those required to fund basic trading operations will be used to make clients whole. The choice of FXDT LLC, in particular as a custodian of client funds, was SpartanFX's mistake and acknowledged responsibility.
 

NextGen4FX

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I never heard of Vern Hedquist prior to this. Seems that from research he has a bad reputation along with Frank Conlin and Rick Young from the Global One disaster.
 
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149
Mod, plz invite Mr. Vern Hedquist to join this thread.

Why they withdraw their NFA membership and still providing service within US?

At this point i think its a scam...
 

NextGen4FX

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**UPDATE** We will be flying down to Florida on Friday along with one of our clients to visit the office of FX Direct Connect LLC. I will let everyone know what happens when we return.
 
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