According to the criminal complaint in Florida’s middle district federal court, between July 2006 and December 2008, Diamond continually solicited investments, some for more than $1 million, from people claiming his company could turn a 5% to 15% monthly profit through foreign currency trading. Unlike with stocks, investors can trade on foreign currency 24 hours a day.
Court documents claim that Diamond started slowly, with about $800,000 in investors’ cash. Much of that was lost or spent on personal expenses, prosecutors said.
In time, Diamond wrangled in more investors with promises of cash “bonuses” that he ultimately paid out with new investors’ money, making it a Ponzi scheme. In one period, according to prosecutors, Diamond said investors’ payments were first delayed by an error in the company, then heavy traffic in the post office because of the Christmas holiday, then ultimately that all their money had been lost.
In fact, prosecutors said, Diamond took a winter trip to Costa Rica on his investors’ dime.
Diamond also bought a $200,000 Lamborghini Gallardo and another luxury apartment in Florida, authorities said.
Eventually, officials said, Diamond confessed to his investors that much had been lost in poor investments, in paying out to previous investors and his private expenditures and that if they sued him, he would not be able to recover their money.
A lawsuit against his company, Diamond Ventures LLC, was filed in Florida federal court Wednesday.