FBI: Florida man swindled Hawaii residents in huge Ponzi scheme - Hawaii News Now - KGMB and KHNL

FBI: Florida man swindled Hawaii residents in huge Ponzi scheme

Patrick Rakotonanahary Patrick Rakotonanahary
Charlene Thornton Charlene Thornton

By Duane Shimogawa - bio | email

HONOLULU (HawaiiNewsNow) - The FBI says a Florida man swindled dozens upon dozens of Hawaii residents in what's being called one of the biggest Ponzi schemes in the state's history.

It happened between December 2007 and May of last year.

That's when 34-year-old Patrick Rakotonanahary began what officials say was a classic Ponzi scheme. Authorities call it "Operation Unhappy Returns" and for some Hawaii residents, it was exactly just that.

Rakotonanahary allegedly ran the scheme through his company, Cyber Market Group. Officials say he visited Hawaii at least twice to market his foreign currency investment plan.

It's estimated he collected $10-million from 100 investors, with nearly $8-million coming from 64 people in Hawaii.

"With today's rates offered by banks, hovering below one percent, con men from the U.S. Mainland and also grown here in Hawaii have seized upon the opportunity to take advantage of unsophisticated local investors by promising risk-free returns at astronomical rates," FBI special agent-in-charge Charlene Thornton said.

Here's how investigators say the scheme worked:

Rakotonanahary marketed a loan program. People would lend at least $30,000. They were promised interest payments of a whopping six to 10 percent a week. Investors sent their money by wire transfer to his company's bank account in Virginia. But he didn't invest their money.

"What Mr. Rakotonanahary failed to tell customers however, was that he was a lousy forex trader and lost money that he traded, like other Ponzi schemes, the defendants used new customer money to pay earlier customers and when the new money stopped coming in, the scheme collapsed," Commodity Futures Trading Commission, Division of Enforcement from New York acting director Stephen Obie said.

Rakotonanahary was arrested in Florida Monday. He faces a hearing in Hawaii, but a date hasn't been set just yet.

"We only hope that the losses suffered by these victims serve as a cautionary tale to the people of Hawaii, so they will greet the next risk-free, high return investment opportunity with a healthy dose of skepticism," Thornton said.

Rakotonanahary faces a maximum of 20 years in prison on each of the 21 wire fraud counts.

He may also have to pay state and federal civil fines that could add up to $30 million.

Copyright 2010 Hawaii News Now. All rights reserved.

Powered by Frankly