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The End of a Scam

The End of a Scam

Two FPA members fell victim to the scam at Legend Trader Limited, a managed forex accounts service based in Hong Kong. The scam worked like this:

1. Pay Legend Trader $3500 up front. Some of the money is supposed to insure Legend Trader in case you skip out on paying account management fees. Some is supposed to to buy an “exotic options contract” to insure the principal in the account.

2. Put $10,000 or so into an account. The CEO/chief trader of Legend Trader, Khalid Alam (aka Khalid Alam Chowdhury) promises to use tight risk management. He also promises that as soon as a little profit is made, he will only risk the profit, never the initial principal.

3. Watch the account balance go up some, then see your account balance suddenly plummet due to a trading style best described as “random trades entered by a drunken monkey.”

4. Ask about using the insurance to recover lost principal. Get lots of excuses. In one case, get appointed to be the European representative of Legend Trader with promises of a cut of the money from any new accounts introduced.

5. Keep asking about the insurance. Somehow, there are always delays and excuses. Eventually, an offer to get back half of what the insurance paid within a month or two is offered.

6. Realize that Legend Trader isn’t answering phones or emails for extended periods.

7. Ask the FPA for help. FPA Investigator Lt. Gerard sends an email to Legend Trader asking if there is a way to fix the problem that will be fair to all parties involved.

8. Then see Charles Lam, Legend Trader’s lawyer (claiming a bachelor’s degree in law – probably a fake one he bought somewhere for $20) make threats against the FPA.

9. Get hung up on when you finally get Khalid on the phone.

10. Eventually realize that Legend Trader is not ever going to return any money at all.

A client paying for an insurance policy against skipping out on account management fees is ludicrous. If an account manager is making so much money that the client owes a lot of fees, this means the client is also making a lot of money and would have to be insanely stupid try to avoid paying fees to someone who is generating so much money. Exotic options contracts do exist, but they have nothing to do with being an insurance policy for any sort of managed account against loss. No insurance company that I’ve ever heard of is going to insure the initial principal in any forex account. From what I can tell, all of those upfront fees were nothing but a way for Legend Trader to take more money from clients while providing no benefits to clients.

After all attempts to negotiate a solution to this problem met with no cooperation from Legend Trader, the FPA issued a scam finding against Legend Trader on July 28, 2008. I am told that the FPA received thank you messages from a number of people who were about to send money to these scammers. At minimum, FPA’s scam warning about this company prevented a number of other people from being victimized.

Once a scam finding is confirmed, the FPA usually advises the victims on how best to contact the proper regulators and if there are any other means for the victim to pursue the case. In this case, since the CEO/chief trader was living in Shenzhen, China (a wonderful city that I highly recommend visiting), the FPA gave the victims the phone number for the Shenzhen police as well as the Chinese word for “English.” (I did wonder what was going on when I got an email from Gerard asking how to say “English” in Chinese.) Gerard’s reasoning was that the Chinese Government takes a very dim view of foreign nationals using their country as a base of operations for questionable financial activities, and might want to know about what Khalid was up to. I agreed with his logic.

I don’t know if either FPA victim actually called the Shenzhen police. I do know that someone involved with Legend Trader managed to get the legal wheels turning in Hong Kong (Hong Kong is a part of China, but has its own semi-detached legal system). Both FPA victims received an email notice that Legend Trader Limited had been liquidated. The Hong Kong Government seized all assets. All foreign partners have been deported and are totally forbidden to travel to Hong Kong or the rest of China in the near future. (That would be the Chinese way of saying, “Don’t even ask about coming back until you fix the problems you caused.”)

Those deported include the person identified as the CEO/chief trader, Khalid Alam (identified as Khalid Alam Chowdhury in some of the documents he sent to the FPA members he victimized) of the UAE, Stephen Johnson of the UK, Lisa Elizabeth of Australia, April Lam of Singapore, and Adam Dobson of New Zealand. I’d definitely recommend not putting money with any company that any these people are associated with in the future.

Gerard tells me that he gave the contact info for the Hong Kong Department of Justice to both victims, so that they can now see if it is possible to recover any of their money.

Lessons learned:

For traders: Look for warning signs. This company was very suspicious. Their email accounts weren’t even on their own domain. The upfront fees were excessive and also made no sense.

Read my article about avoiding managed forex scams for more on how to protect yourself from managed account fraud.

For scammers: The FPA doesn’t run away or hide when you make threats. Your scams will be publicly revealed. Sooner or later, criminals will find themselves in court. Trying to hide your operations in another country won’t save you. There are plenty of legitimate ways to make money in forex, so why not give those a try?

I’d like to thank Lt. Gerard and the rest of the FPA Scam Investigations Committee for providing me with the information needed to write this article.

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Pharaoh

Pharaoh

Pharaoh is one of the FPA's oldest members (he claims to be about 4000 years old, but we think he's exaggerating a little). He says he created the world's first trading pair (Cow/Goat) while ruling ancient Egypt. Although there are no archeological or historical records to support this claim, we can't find anything to disprove it. Although he's not as active at the FPA as he used to be, he still holds the highest post count of all FPA members.

We don't understand how he does it, but Pharaoh has an uncanny ability to spot scams faster than anyone else we've seen. He claims to have known a number of companies were HYIP scams just by their domain names and that each time an examination of the website proved him right. He's also famous inside Forex Peace Army for warning about Ponzi schemes, even ones run by large and well established companies. He's been in a number of threads trying to warn people away from active Ponzi schemes. In spite of the efforts of shills and those gullible enough to believe in free money to discredit his words, he keeps up the warnings. In each case, the company ended up either disappearing with all client money or being shut down by the authorities.

In addition to investigating scams, Pharaoh has written a number of articles on a wide rage of trading topics, including forex broker selection, risk management, and how to select a good account manager. He's also covered other items of interest to traders, such as protecting wealth and purchasing precious metals.

Pharaoh claims to be a business consultant, but says he makes most of his income by running a globe-spanning hamster smuggling operation. If we are to believe him, he's currently working on a network of hamster tunnels under southern Europe.

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236 Views 14 Comments

Comments

dances with Forex
10 years ago,
Registered user
“Don’t even ask about coming back until you fix the problems you caused.”

...What? No caning???


P.S. (any "bachelors degree in law" is fake)
andydoc
10 years ago,
Registered user
Nice work, guys

BUT

FYI, 'dances with Forex' is wrong. In the UK an LLB is a Bachelor's Degreee in Law

Andy
passyson
10 years ago,
Registered user
Lol...expect to have more haters out there! You should be receiving hate mail soon in some obscure website...> felix is a scam kind of backlash! :)

Keep up the good work
Pharaoh
10 years ago,
Registered user
Canings are usually only done in Singapore, but at least one of the scammers is going back there, so we can always hope.
:D


There are bachelor's degrees in law, but that's not enough to be a practicing lawyer in many countries. Gerard let me look at the emails this guy wrote - he definitely didn't seem nearly as knowledgeable as any lawyer I've ever dealt with.
awsl
10 years ago,
Registered user
Would it be a good idea to setup a section and post the photos and details of those scammers, like those criminal mug shots. We can keep an area to update on those scammers like wikipedia as a warning to others.
RedRobin06
10 years ago,
Registered user
First of all, I would never give money to anything or anybody like that. Second, one of my rules is never allow anyone to do your trades for you. Do your own trades. That way, when you lose money, you can only blame yourself. I do my own work, I make my own money, I earn my own merits. I know a scam when I see one.
Onyebuchim C. Obike
10 years ago,
Registered user
Strongly agree with Pasting their Photos in a gallery of SHAME & SCAM for beginners and all to believe Scamming is real.

Thanks a lot for the hardwork FPA Team.
Jim Kielt
10 years ago,
Registered user
Great work Felix and FPA team! It's great to have you guys on our side and may your ever strenghtening presence keep the brokers in line and the scammers at bay!!
ABDULAZEEZ I.T.AFOLABI
10 years ago,
Registered user
This is job well done, and more grease to your elbow. I feel the victim ought to have even suspected them to be scammers going by their funny names. While the CEO is bearing Alam and his supposed "lawyer" Lam, ought to have formed an alarm synopsis of their dubiety to these unfortunate fellows.

For now, FPA is growing on daily basis globally and I want to suggest that it should start thinking of how to form a global network around scammers and would-be scammers. This will portray the seriousness of the anti-fraud posture of FPA in the realm of forex business.

I also want to submit that a situation where someone has fallen victim and the FPA that forms the bastion of hope against scams now suggesting to the person(s) to contact appropriate regulators or find other means of pursue the case is like rubbing salt over a fresh wound. In this case I will further hammer on my suggestion that there should be a very concrete modality towards the formation of the aforementioned network against fraud.

AbdulAzeez I.T. Afolabi
ernest8fingers
10 years ago,
Registered user
the power of FPA

This forum DOES work! All POS Forex thieves beware! We all get what we deserve-its only a matter of WHEN.
davedubai
10 years ago,
Registered user
Khaleed Alam Chowdhury ?? Of UAE ?

Dear All Of FPA

Thanks for updating on the scam .. I have a personal doubt about this man to be from UAE as his last name suggest him to be of either from bangladesh or from India as his last name (if that is not a scam) does not exist in UAE.

He may have a forged UAE passport to prove that he is from UAE ...


Any one to varify this as i am in UAE and if the guy is from here I better raise alarm to traders here.


However thanks again for who ever took initiative to get these cheaters back to caves to hibernate( may be for time being ....)
Tonade
10 years ago,
Registered user
:D TONADE OLADAPO
Can't imagine why some can't think of a productive way of making money than to scam. Felix, thank you very much for saving people from getting scammed and for assisting the scammed.
eam159
10 years ago,
Registered user
Paying an upfront fee as insurance against skipping out?! Folks, the warning lights don't get any brighter than that. Congratulations in getting them shut down.
Benedict88
10 years ago,
Registered user
> Canings are usually only done in Singapore, but at least one of the scammers is going back there, so we can always hope.
:D


i suppose april lam is a female and caning applies only to guys in singapore.