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Maryland Securities Division - Investor Education

Invest With Common Sense

The Case of Joshua Fry: An Investment That Was "Good Till Canceled"

During the early 1990's, Joshua Fry hosted a radio talk show in the Washington, D.C., area and provided on-air advice about options trading. Many of Fry's radio listeners contacted him about individual investments believing that they were dealing with a reputable investment adviser. Fry recommended his own "GTC Fund", which at different times stood for "Good Till Canceled" or "Gamblers Trading Consortium" Fund. According to Fry, the GTC Fund was invested 25% in options with the remaining 75% in treasury bills. Fry touted the GTC Fund as a legitimate mutual fund combining very low risk with a very high rate of return -- a situation as rare as Cal Ripken taking a day off from work.

Fry sent his GTC investors regular statements that indicated consistent, yet unrealistically high, returns on their investments. Some of the early investors in the GTC Fund were paid both their original investment and Fry's promised high return rate.

In reality, Fry's high-flying mutual fund was nothing more than a classic Ponzi scheme. Unbeknownst to his victims, Fry did not invest their funds as promised, but

withdrew nearly $1 million in cash and used investors' funds to support a lavish lifestyle that included stable ownership, racehorses and gambling junkets in Atlantic City. The investors who received some returns from the GTC Fund actually were paid out of the funds of the later investors, not from any actual investment profits.

Before the scheme was halted in the Fall of 1993, Fry obtained more than $6,000,000 from more than one hundred investors. Notably, neither Fry nor his investments were properly licensed with the Maryland Securities Division or the federal Securities and Exchange Commission.

Fry's scheme began to unravel when he made false statements about the nature of the GTC Fund to the Maryland Securities Division, which was investigating his activities.

After the Securities and Exchange Commission sued him and froze his assets, Fry fled Maryland. Fry was later indicted, apprehended in Cincinnati, and returned to Maryland where he pled guilty to state charges of theft, securities fraud, making false filings with the Maryland Securities Commissioner, and failure to file income tax returns. In 1995 Fry was sentenced to eight years in prison and ordered to make restitution in excess of $3.8 million. However, Fry's victims are unlikely to recover all of their losses -- only $500,000 remained when the SEC seized his assets.

What can you do to prevent yourself from becoming a victim of the next Joshua Fry? First, don't fall prey to the false signs of financial prowess, such as the simple fact of hosting a radio show. Many shows are paid for by the featured host and may be nothing more than a poorly disguised commercial for the host's business. You still need to do your own homework to check out any financial adviser that you are considering.

Make sure that you contact the Maryland Securities Division for information about your investment adviser or financial planner. Virtually every investment adviser or financial planner doing business in Maryland is required to be registered. The Securities Division can tell you whether or not your adviser is registered and, therefore, has met the minimum competency requirements under Maryland law.

Also, contact our office to check out the investment that you are being offered -- the Securities Division can tell you whether or not that investment is registered or should be registered with our office.

The fact that an adviser is registered with the Division does not guarantee his competence or integrity. But the failure of an adviser to be registered is a clear sign that something is wrong. Similarly, the mere fact that an investment is properly registered does not mean that it is a wise investment for you; however, an investment that is not registered or legally exempt from registration is guaranteed to be an unwise investment.

For Fry's victims, one simple phone call to the Securities Division may have prevented the loss of millions of dollars.

Call us, we're here to help!
The Maryland Securities Division
(410) 576-6360


Attorney General of Maryland 1 (888) 743-0023 toll-free / TDD: (410) 576-6372
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