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The Honolulu Advertiser
Posted on: Thursday, February 19, 2009

Hawaii businessman accused of bilking deaf investors

By Curtis Lum
Advertiser Staff Writer

Two federal regulatory agencies have filed lawsuits against a Hawai'i businessman, accusing him of operating a Ponzi scheme that bilked deaf investors out of almost $3 million and spending $1.4 million of the funds on himself.

In separate complaints filed yesterday in U.S. District Court, the Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission accused Marvin Cooper, chief executive officer of Billion Coupons Inc., of fraud and making unauthorized offers and sales of securities. The agencies are seeking an injunction to stop Cooper from continuing his operation and order him to make full restitution to his investors and pay civil fines.

Cooper could not be reached for comment yesterday.

According to one of the lawsuits. from September 2007 to January 2009, Cooper, 32, sought investors to engage in foreign currency trading. Through his Web site, seminars and personal contact, Cooper was able to raise $4.4 million from at least 125 investors, most of whom were deaf, the suit said.

Depending on the amount of their investment, clients were promised monthly returns of 15 percent to 25 percent, the SEC lawsuit said.

Cooper, whom the SEC said is deaf himself, also had a nationwide network of seven "fundraising entities" that solicited investors and were promised a 5 percent to 10 percent referral commission, the lawsuit said.

In documents obtained by the SEC, many people said they were investing their life savings with Cooper and BCI to improve their lives as well as help the hearing-impaired community.

"We want to invest for our retirement," said one investor. "Grow enough funds to support my family and contribute to deaf organizations," said another.

Cooper guaranteed the safety of the funds and the "payment of the minimal daily profit," the lawsuit said. But the SEC alleged that all of Cooper's representations were "false."

The SEC said Cooper invested only about $800,000 of the $4.4 million on the foreign exchange market, but lost more than $750,000. He spent $1.4 million on personal expenses and kept the Ponzi scheme operating by using $1.6 million in new investor funds to repay old investors, the lawsuit alleged.

Cooper spent the money on flying lessons, computer and electronic equipment and to purchase a $1 million home, the lawsuit said.

"Cooper used BCI's bank account (into which all the investor funds were deposited) as his personal piggy bank," the SEC lawsuit said. "Cooper is the sole signatory on BCI's bank account."

Despite the losses, Cooper sent false monthly statements to his investors, reporting profits as high as 25 percent. Not one negative month was reported, the lawsuit said.

In late 2008, however, the scheme began to collapse, the SEC said. In November 2008, Cooper lowered the rate of return for December to 8 percent and suspended investor withdrawals.

On Jan. 20, Cooper sent a letter to investors, informing them that he was under federal investigation. He wrote that he "has nothing to hide because (BCI's) activities are lawful," according to the lawsuit.

On Jan. 25, however, Cooper sent an e-mail to investors, telling them that he was discontinuing the investment program and that he was "not in a position to distribute any gains to our investors at this time," the SEC alleged.

But the SEC said Cooper continued to deposit new investor funds into BCI's bank account through late January and used funds for foreign exchange trading through Feb. 6.

In a motion filed in court yesterday, the two regulatory agencies are seeking to consolidate their complaints.

Reach Curtis Lum at culum@honoluluadvertiser.com.