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Biggest Forex Scam Pt. IV (Russell Erxleben)

August 23, 2010 (Last updated on January 17, 2016) by Andriy Moraru

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.

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.


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.”

German Bonds Fraud

Determined to move forward in life, initially, Erxleben started to work for a person named Fred Gladle, who was soliciting investments for his shopping arcade project (Family Funplex). However, Erxleben’s priority changed soon after seeing the high value checks received by Gladle from his other venture involving the trading of the German gold bearer bonds.

Beginning in September 2005 and continuing until October 2009, Erxleben began soliciting investments for the German gold bond scheme. To potential investors, he stated that the bonds, each costing $1,000, would be placed in a trust named INGOT (Insured Note of German Obligations Trust). He further told the prospective investors that with bonds as the underlying asset, the trust would create securities carrying AAA-rating from the Standard & Poor’s, a well-known financial rating provider.

Erxleben also lied that the asset backed securities would be worth several times the value paid for the German gold bonds, thereby making it an attractive investment vehicle for the institutional investors. Finally, to convince investors, Erxleben told that the securities would be sold to institutional investors at an exorbitant price, thereby resulting in a gain of more than 100% per annum for the next 30 years. As a part of the investment scheme, Erxleben also offered a joint venture agreement to the investors.

In reality, the bonds issued in the aftermath of the First World War had arguably lost its value following the post-war debt agreement signed by Germany.

Using a sum of $75,000 borrowed from his longtime friend Derrich Pollock, Erxleben ventured into the trading of the German gold bearer bonds.
For the purpose of running the bogus scheme, between January 2005 and January 2009, Erxleben established several entities, namely, WALTEC Consultants, LRE Holdings, and The MDM Group. The venue of business operation for all the entities was Lakeway, Texas.

To hide the money trail, Erxleben also opened and operated more than 50 accounts in several banks, including, but not limited to, the Wells Fargo Bank, Frost Bank, Wachovia, Chase Bank (formerly Washington Mutual Bank), Bank of America, and Compass Bank. Some of the bank accounts were in the name of his family members.

In March 2009, as the German bond investment scheme started collapsing, Erxleben began soliciting investors for another Ponzi scheme. To prospective investors, Erxleben stated that he is in possession of a rare 19th century painting (The Sorcerer of Hiva-Oa) drawn by the renowned French artist Paul Gauguin. He further informed the potential investors that the painting could be sold for about $58 million, provided a sum of $75,000 is spent to certify its authenticity. Erxleben, who claimed to be a member of the entity The Gauguin Partners LLC, received as much as $25,000 from the new investors by giving false hope of sharing profits. As such, Erxleben was in no way related with the The Gauguin Partners LLC or the painting.

From the beginning of 2005, Erxleben received more than $2 million from the investors of the German gold bond scheme and the Paul Gauguin painting venture. However, none of the investors received the bonds or any kind of ownership document. Erxleben spent most of the investors’ funds for himself and his family members.

Another Lawsuit and Sentence

In October 2012, a lawsuit was filed on Erxleben by a person named Matthew Hand for non-delivery of the bonds. Hand demanded his investment of $60,000 back from Erxleben and co-defendants Kimberly Erxleben, Fred Gladle, Barbara Gladle and the LT Entertainment Group.

In January 2013, Erxleben was arrested and indicted with five counts of wire fraud, two counts of money laundering and one count of securities fraud. Following the arguments, the grand jury sentenced Erxleben to 7.5 years imprisonment in February 2014. The Erxleben’s family hopes that he will come out of prison as a reformed man.

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.


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