A fund manager based in the U.S. Virgin Islands operated a $105 million foreign currency Ponzi scheme that involved 400 investors, the Securities and Exchange Commission charges.

The SEC today announced the charges and an emergency asset freeze against Daniel Spitzer, 51, a U.S. citizen and resident of St. Thomas, and companies that he controls. Spitzer has been operating the scheme since 2004 and it is on the verge of collapse as he has delayed and avoided paying redemptions, the SEC says.

Spitzer used several entities and sales agents to misrepresent to investors that their money would be invested in investment funds that, in turn, would be invested primarily in foreign currency. Investors were falsely told that Spitzer's funds had never lost money and historically produced profitable annual returns that one year reached over 180%, the SEC says. He instead used money raised from new investors to pay earlier investors, and misappropriated investor funds to pay unrelated business expenses. He concealed his scheme by issuing phony documents to investors that led them to believe their investments were profiting.

According to the complaint, filed in U.S. District Court for the Northern District of Illinois, Spitzer only invested approximately $30 million of the more than $105 million he raised from investors. In addition to paying off earlier investors with the funds he collected, Spitzer also used more than $4.8 million to pay third-party business expenses, and as part of his extravagant lifestyle, spent more than $900,000 at a Las Vegas casino, the SEC charges.