Francisco Arias ran a $1.2 billion trading fund between special-ops missions. Or not.
By E. Thomas Wood
12-07-2009 12:06 AM —
He's nowhere to be found at the moment, so maybe Francisco R. Arias Jr. has gone behind enemy lines. But the 22 investors from across the United States who filed suit against Arias in Nashville late last month probably have other ideas about why he seems to be lying low.
Arias, who moved to Nashville from Florida earlier this decade, is at the center of numerous legal claims and counterclaims over his activities as a supposedly high-flying foreign currency exchange (or "forex") trader. The three related lawsuits filed against him Nov. 24 in Davidson County Circuit Court are the latest volleys in the legal battle. The investors seek $10.9 million in punitive damages for what they term "promissory fraud" by Arias.
In another case involving Arias, his father-in-law has said Arias duped him into serving as the "face" of the investment operation. You see, Arias "was in special operations with the United States Military and must keep his identity hidden," he is said to have told father-in-law Gary Doney Sr. of Lebanon. Arias even gave Doney the authority to sign documents on his behalf "in the event that something happened to him on one of his alleged military excursions."
Eventually, Doney said, it became clear that Arias "is not presently, nor has he ever been, a member of any branch of the United States armed forces."
But he did file for bankruptcy in 2007 and in May of this year, U.S. Bankruptcy Court Judge George C. Paine II issued an “order finding fraud” that prevents him from discharging his debts to various investors through the bankruptcy process.
For a time, Arias had Doney and plenty of other people convinced that he was not only an international man of mystery but also a genius at making money in the notoriously volatile forex markets.
The plaintiffs in the latest lawsuits say Arias talked them into making one-year loans that offered a guaranteed interest rate of 30 percent. Doney signed promissory notes to the investors, who believed the returns would be derived from currency trading by Arias. They say he showed them false financial statements indicating that his trading company, Adieus Corp., had a net worth of hundreds of millions of dollars.
Doney, for his part, says Arias showed him "a computer screen that evidenced trading in the account reaching a value of as much as $1.2 Billion and resulting profits of as much as $180 Million." The figures were fake, he claims. But Doney would have been in a position to know one number for real: He said the total amount Arias took in from investors came to as much as $3.4 million.
The new lawsuits say Arias put out promotional materials asserting that he had a 90 percent success rate in his trades, achieved by using a proprietary software system that "minimized or eliminated investment risk."
Some of the plaintiffs say that while Arias was investing their forex funds, he also sold them equity in a new wealth management company, Reynier Holdings. He promised it would go public and make its owners wealthy.
Franklin resident Rick Mattos was one such buyer. Besides investment losses of $176,000, his lawsuit says he is out $60,000 on the equity investment.
Enticed by the high returns they believed they could obtain via Arias, some of the plaintiffs went to exceptional lengths to come up with money to invest. John and Natalia Yosco of Franklin took out a $150,000 second mortgage to fund their purchase of Reynier equity; they were eventually forced to sell the home, their lawsuit says.
Two Florida investors cashed in Individual Retirement Account funds to invest in Adieus. Each lost almost all the money invested while also incurring substantial IRA withdrawal penalties and fees, according to one of the complaints.
Nashville attorney Kevin S. Key is representing the plaintiffs in the three new lawsuits. He declined to comment on them when reached last week.
Two Nashville-area telephone listings for Arias were out of service last week. Filings in Davidson County General Sessions Court indicate he was evicted from a home on Country Wood Circle in Donelson last September.