Luis H. Rivas Facing Lawsuits, Creditors
posted May 23, 2008
An Ooltewah man who promised "immense wealth through leveraged foreign exchange" has been forced into bankruptcy by some of his creditors.
The case involving Luis H. Rivas has been assigned to John Cook, a Chattanooga bankruptcy judge.
Four creditors said they are owed over $1.1 million by Mr. Rivas and his Forex Project.
He has been sued twice in Hamilton County Chancery Court, but those proceedings were stayed by the bankruptcy filing.
Attorneys said a number of local residents invested hundreds of thousands of dollars into the program that promised amazing earnings on money made off dealings in foreign currency exchange.
The investors initially received payments, then the flow of money stopped, the attorneys said.
Chattanooga Attorney Barry Abbott said, "I have received a number of calls from people who invested money with Mr. Rivas. Some were local and some were from out of town.
"When I began investigating this case, I was amazed that the area of foreign currency exchange is essentially unregulated. With stocks and bonds and, to some extent, even with futures you have some assurances that a regulatory system is in place to provide some protections. But that is not the case with foreign currency exchange."
Creditors in the bankruptcy case are Dr. Connie Godenick of Spartanburg, S.C., who said she is owed $45,000; William Saliba of Orlando, Fla., who said he is owed $187,736; Dr. Ted Rozema of Nexum Ministries of Tryon, N.C., who claims his loss at $400,000, and Dr. Asbjorn Kvammen of Landrum, S.C., who said he is out half a million dollars.
A Chancery Court lawsuit filed by Summit Growth Group Defined Benefit Plan of Nevada says the group invested $100,000 with Mr. Rivas through an office he maintained at 6031 Century Oaks, Suite B., in Chattanooga.
It says Mr. Rivas last June 16 executed a promissory note to them for the $100,000. He promised principal and interest at a rate of 96 percent per year.
The group said he sent monthly payments totaling $48,000 through Feb. 1. Then the payments stopped.
The suit charges that the plaintiffs were victims of a "fraudulent Ponzi scheme."
They said they learned that the "supposed headquarters of The Forex Project located in Spartanburg, S.C., was abandoned in April. Rivas and the Forex Project appear to be absconding with the fruits of the fraud."
The plaintiffs said they believe the money was being held in Rivas accounts at Regions Bank and First Tennessee Bank.
In another lawsuit, Allan Valenzuela of Hamilton County said he paid $1,500 to attend a Forex Project seminar on Lee Highway in March 2007 "to learn about investing in the off-market foreign currency market."
He said it was represented to be "an investment scheme whereby members could reap enormous returns in the off-market foreign currency market."
He said Mr. Rivas told him if he invested money, his return would be 10 percent per month.
Mr. Valenzuela said he invested $257,000 to Mr. Rivas over a nine-month period. He said the first "guaranteed" return payments, then the flow of money stopped in March. He said he is currently owed $25,700.
Mr. Valenzuela said he contacted Mr. Rivas repeatedly to demand the money owed and Mr. Rivas made "promise after promise" it would be paid.
Mr. Valenzuela said he never had access to his "trading account" and "has never seen evidence that his funds are actually being used for trading."
He said he finally "lost all faith in the legitimacy of the scheme."
There was an agreed order in the case in which First Tennessee Bank was to wire $163,945 from one account and $26,548 from another account to a Valenzuela account at the same bank.
Also, an additional $69,505 was to go to Mr. Valenzuela from Mr. Rivas in order to get the case dismissed.
An officer attempting to serve court papers on Mr. Rivas said he went to 7405 Splendid View Dr. in Ooltewah. He said a woman was standing on the porch, and she said Mr. Rivas was not there.
The officer said the woman refused to accept the court papers, and he put it in the mailbox.
A website says Mr. Rivas began his career in 1978 as a trader at the Chicago Board of Trade. In 1979 he wrote and freely distributed to the trade, a white paper entitled, "The Ripple Effect Theory of Price Action."
The website says the theory states that "market sentiment can be likened to a pool of water and that significant events act like stones tossed into the pool creating measurable ripples in price action.
These events can range from the daily opening or closing price, to major market reports, to major world events. All act as stones in the pool of market psychology and all create ripples. The distance, duration, frequency, in short, the overall periodicity of these ripples is quantifiable and consistently measurable.
"The actual distance in price range from each event, (in other words the distance of the ripples from each other and the initial "stone") can be summed as a level of support or resistance. After much testing, he further determined that these support and resistance levels are a reflection of the psychological comfort levels of market participants."
Basing his work on the Ripple Effect Theory and using the Fibonacci Mathematical Series, and the Lucas Mathematical Models, Mr. Rivas then developed a system, that he named, "The Fibonacci Filter," the website says.
The Fibonacci Filter is described as "a virtual 'magnifier' for reading market movements as small as a few minutes apart and 'Filtering' sentiment and psychology from market noise, then quantifying it mathematically into a usable strategy. Using as a base a specific event price (opening, closing, breach of a specific level etc.), this filter can project remarkably accurate levels of support and resistance. The numbers produced by the Filter, when compared to real-time price movements, mirror the market such that you can tell when an event has changed market sentiment without ever needing to know what the event was.
"The Filter lets you see the market's reaction without needing to know what the news is. The price action reflects the sentiment of market participants. Most startling was the discovery that the larger the market, the better the Filter 'reads' the sentiment.
"It's accurate for soybean futures, not as accurate for wheat futures, and barely accurate for Pork Bellies. Guess which of those markets is smallest.
"When applied to stocks, the Filter's accuracy rose tremendously. This factor, was the primary motivation for continuing to share the initial information freely.
"Suffice it to say that the Forex market, the trading of the world's major currencies, is the largest market in the world. It dwarfs, in a single trading day, all the world's stock markets combined. It is the perfect venue for the Fibonacci Filter. It is also why The Forex Channel will undoubtedly make a great many people very, very wealthy."
The site says, "The more people trading the system, the more accurately it 'reads' the market. It is the reason for The Forex Channel. We are very quickly building the world's largest and most successful Forex trading community and the larger we get, the better the trading signals work."
The site promised that Mr. Rivas "will teach you everything he has learned about The Ripple Effect Theory and The Fibonacci Filter."
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