Florida Man Charged with Defrauding Hawaii Residents

March 16, 2010 - HONOLULU—A federal indictment in Hawaii charging Patrick H. Rakotonanahary, age 34, a resident of Florida, with 21 counts of wire fraud was unsealed late yesterday upon Rakotonanahary’s arrest in Florida. The indictment was previously returned by a federal grand jury on March 10, 2010, but sealed until his arrest.

Florence T. Nakakuni, U.S. Attorney for the District of Hawaii, said that according to the indictment, Rakotonanahary, as president and chief executive officer of Cyber Market Group, LLC, marketed an investment program which purported to pay investors six to 10 percent interest per week based on the trading of foreign currencies (Forex). The indictment alleges that between Dec. 20, 2007 and May 2009, Cyber received approximately $10,255,300 in investments from more than 100 individuals, which included $7,994,300 from 64 individuals or entities in Hawaii.

According to the indictment, instead of using investor money to engage in Forex trading, Rakotonanahary primarily paid investment returns to earlier investors with investment funds from later investors as part of a “Ponzi scheme,” using only about $1,864,000 for Forex trading, which generated losses of $814,806. Instead, Rakotonanahary used approximately $8,375,703 to pay investment returns and another $1 million personally.

Rakotonanahary faces a maximum term of 20 years in prison on each of the counts. Charges in an indictment are merely accusations, and each defendant is presumed innocent unless and until proven guilty.

The criminal case resulted from a joint investigative effort by the FBI, the Commodity Futures Trading Commission (CFTC), and the State of Hawaii Department of Commerce and Consumer Affairs (DCCA). Both the CFTC and DCCA filed related actions against Rakotonanahary. The CFTC filed a civil complaint in federal court, while the DCCA issued a preliminary order to cease and desist.

Such cooperation among civil and criminal investigative agencies in federal and state governments is an example of the type of mutual effort expected as a product of the Financial Fraud Enforcement Task Force established by President Obama in November 2009. That Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources, as demonstrated by the multiple actions brought in this case. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

This case is being prosecuted by Assistant U.S. Attorney Lawrence L. Tong.