January 26, 2010 - Ty Allan Klotz, 48, formerly of Mason, Michigan, was indicted on multiple counts of mail fraud, wire fraud, and money laundering in a scheme to defraud hundreds of investors out of more than $2,000,000.00, announced U.S. Attorney Donald A. Davis. Mr. Davis was joined in the announcement by FBI Special Agent in Charge, Andrew G. Arena, and IRS Criminal Investigation Special Agent in Charge, Maurice M. Aouate.
According to the indictment, prior to 2004, Klotz earned a living as a handyman, performing construction and other odd jobs in and around Mason, Michigan. He began trading stocks and commodities for family and friends, using an Internet-based electronic trading website. In 2004, Klotz allegedly began telling area residents that he was an expert in commodities trading and was earning substantial returns from his trading activities. Soon after, he established several businesses in Mason, including Aurifex Investment, Aurifex Research LLC, and Aurifex Commodities Research Company, and created the appearance that he was a licensed commodities broker.
According to the indictment, from April 2004 through March 2006, Klotz devised a scheme to defraud hundreds of investors by making several misrepresentations, including that he was averaging a return of twenty-percent per month, that investors’ funds would remain on deposit in an FDIC-insured financial institution, and that investors’ funds were additionally insured by Lloyd’s of London. It is further alleged that Klotz fueled his scheme to defraud by creating monthly statements of account, which he mailed to investors, showing large investment returns that were entirely false and that caused many investors to increase the amount of their investments with the Aurifex entities. As alleged in the indictment, Klotz actually used the investors’ funds to pay wages and bonuses to and buy gifts for his employees and their relatives, and for his own personal expenditures, including the purchase of Rolex watches, luxury vehicles, expensive clothing and a personal residence, and other expenditures not disclosed to investors.
According to the indictment, in December 2005, the Commodities Futures Trading Commission began investigating the Aurifex entities and Klotz. It is alleged that after learning about the investigation, Klotz started returning some of the investors’ initial deposits, characterizing the payments as a “Christmas Bonus.” Klotz then allegedly traveled to Carbondale, Illinois, where he resided in secrecy with the company accountant and attempted to explain his disappearance by claiming that he had been ordered to serve on a secret mission for the military. It is alleged in the indictment that during his fraudulent scheme, Klotz obtained over two million dollars from investors. Although he returned some of the investors’ funds and additional amounts were recovered by the Commodities Futures Trading Commission, most investors are still owed significant sums of money.
On January 14, 2010, the FBI arrested Klotz in Carbondale, Illinois, and he appeared before a United States Magistrate Judge in East St. Louis, Illinois, who ordered his detention. Klotz will be arraigned on the charges in the indictment in United Stated District Court in Grand Rapids after his transfer from Illinois.
Mail fraud and wire fraud each carry a maximum penalty of 20 years’ imprisonment and a $250,000 fine. Money Laundering carries a maximum penalty of 10 years’ imprisonment and a $250,000 fine.
The charges in an indictment are merely accusations, and the defendant is presumed innocent until and unless proven guilty in a court of law.
U.S. Attorney Davis commended the Special Agents of the Federal Bureau of Investigation and IRS Criminal Investigation, along with the Mason Police Department and the Commodities Futures Trading Commission, for their hard work in this investigation. This case is being prosecuted on behalf of the United States by Assistant U.S. Attorney Ronald M. Stella.
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