In the second half of 2008, the last hurrah for Diamond Ventures, investors thought they were compounding their money at 3.5 percent or more each month and that Diamond was not only immune to the world financial turmoil, but a beneficiary.
Investor Andrea Stone asked Diamond on Sept. 26 about how the "global meltdown" was affecting his trading.
"The only impact it has is causing additional movement in the currencies, which is great for us," Diamond responded by e-mail. "Remember that all we need is movement, in either direction."
But Diamond -- rather than cautiously setting up small trades -- appears to have been gambling heavily on currency markets in a desperate stab at getting back in the black. For a while, he had three accounts at three brokerage firms.
Diamond had winning streaks. Starting on Oct. 10 in one account, he took $640,000 and ran it up to $5.16 million by Nov. 5. On one day alone, he gained $872,000. But then he incurred a string of losses, and, by Nov. 28, the account had only $2,000.
So far, the Bradenton lawyers have found that Diamond took in $38 million, but acknowledge it could be more.
To keep investors coming, Diamond paid out as much as $18.5 million. Trading records show he lost $14.4 million.
The lawyers can see that Diamond spent $2 million on himself or his friends and work associates. There are many unexplained transfers as well.
As November turned into December, investors used to collecting large monthly returns noticed that the flow had stopped. Diamond blamed Bank of America, saying he would switch banks before the January pay-out was due. #