1. Money

Perry Griggs of Aloha Trading Operates Commodities Ponzi Scheme From Prison

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From the file of You Just Can’t Make This Stuff Up, I was dumbfounded when I read a press release from the Commodity Futures Trading Commission (CFTC) where an inmate in a federal prison was able to solicit money from follow prisoners and their families to trade commodities. Not surprising, he promised 100 percent returns with no risk and it doesn’t take much imagination to figure how this story ends. The tale of Aloha Trading made me laugh…it made me cry…actually, I’m thinking this guy must have been one heck of a salesman / con-man to pull this one off.

I have to begin this story with the disclaimer that this is information contained in a complaint from the CFTC and the defendants have not gone through the court system or admitted guilt. However, they have disappeared and are nowhere to be found – you may form your own opinion.

Perry Jay Griggs was serving a prison sentence of 96 months for a Ponzi scheme that involved trading coffee futures, where he claimed he had inside information and he guaranteed 100% returns. The end result was that he used the money for personal expenses and to keep the Ponzi scheme going. Eventually, he was ordered to pay $3 million in restitution and went off to prison.

With a resume like this and an address of a federal prison, you wonder how anyone in their right mind would invest money with this guy. Unfortunately, he and his wife were able to con about $3 million out of his investors. The surprising thing here is that he solicited fellow inmates and his wife solicited the inmates’ families. So, these people knew full well that he was in prison and they still decided to fork over their life savings, liquidate retirement accounts and mortgage their houses???

I always recommend that investors checkout brokers or anyone they want to manage their investments. In this case, the background check could have been short and sweet, as the investors knew where he was currently residing. Apparently he and his wife lied about the reason he was in prison, but it doesn’t take to much work to check on the reason he is actually in prison or at least avoid doing business with someone in prison for fraud.

Let’s find out how this story ends. It turns out that Griggs was still a terrible commodity trader as he lost about 83 percent of the money in the trading account. He and his wife also used about $1 million to pay for personal expenses, luxury car leases, renting a home in Hawaii, jewelry and chartering a private jet. Some of the money was sent to investors to keep the Ponzi scheme going, until it collapsed.

Perry Griggs and Rachelle Griggs are currently on the run from the authorities. Neither of them were registered with the CFTC, nor was their trading firm Aloha Trading. That should been a red flag for investors. Hopefully, their days of scheming in the commodity markets are over. When Griggs does return to prison, I hope the judge has the foresight to revoke his internet privileges. Believe it or not, he was trading commodities from prison.

You can find the press release on this case of Perry Griggs, Rachelle Griggs and Aloha Trading at the CFTC’s website: http://cftc.gov/PressRoom/PressReleases/pr5929-10.html.

The legal complaint can be found at: http://www.cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enfalohacomplaint102810.pdf.

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