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Biggest Forex Scam Pt. IV (Russell Erxleben)

August 23, 2010

If you’ve read the first article in this series, you’re probably wondering what is with people named “Russell” and Forex scams? How does a former football star with an almost decade-long career in professional football end up in the Forex trading market and bilking millions of dollars from innocent investors? Here’s the entire story:

The Beginning

Erxleben stood out as a kicker right since his days in high school. Owing to this success, he was granted an admission to the University of Texas and was considered a top prospect. He went on to get drafted in the NFL and played ten seasons, although without much of the fame or any of the record-breaking performances he was known for previously.

As his days of playing football came to a close, so did his finances. After a series of failed attempts at business, Erxleben filed for bankruptcy in 1991 and left his debtors poorer by $1.3 million. But he didn’t give up, although we do not say that out of admiration.

Within a couple of years, he was hatching another scheme that would see his investors lose at least 25 times more money than before. The name of this scheme was Austin Forex International.

Austin Forex International

For a few years, the company seemed to do quite well. They owned a number of luxury vehicles and had a luxury box at the Royal-Memorial Stadium. However, the true story was entirely different. The firm, in effect was merely a ponzi scheme where they would take the money from new investors to pay off the old ones and keep the charade going.

The Lawsuit

The State Securities Board filed a lawsuit against the firm in the late nineties accusing them of falsifying their statements. The firm had been losing money all the while they claimed excellent profits and was abruptly shut down in the middle of the investigation that followed the lawsuit.

It was later revealed that over 500 investors had over $35 million they were about to lose in this fiasco. However, there were a number of other firms that had known of the malpractice. In order to avoid litigation, those firms shelled out over $30 million in settlements, which helped most investors get their money back.

Erxleben confessed to committing mail fraud and securities fraud and was sentenced to 84 months in prison along with a $1 million dollar fine and had to pay an additional $28 million approximately as restitution charges.

Release

Erxleben was released from prison in 2005 after which he went back to trying more ventures for making money. This time, it was about buying and selling German bonds that would allegedly return over 100% profit for a long period of time. Despite the lawsuit and the fact that the government unearthed incriminating evidence against the people who got Erxleben into the bond trading business, Erxleben maintains that he was innocent this time and called the investigation into his affairs as a “witch hunt.”

As of now, he seems to have given up on such investments altogether. But can he stay away from it or will we see another scandal in the coming years? Only time will tell.

This concludes our four-part series on the biggest Forex scams, and we hope you’ve enjoyed reading about them as much as we’ve enjoyed bringing them to you. We will continue to bring more such interesting stories from the Forex market for you on a regular basis. Keep visiting for more updates.

If you have some comments on this one of the biggest Forex scams, please, feel free to have your say using the form below.

One Response to “Biggest Forex Scam Pt. IV (Russell Erxleben)”

  1. Rupam Guha

    I think the brokers who provide the forex robot software, are also scams.

    Reply

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