Showing posts with label ALLEGED FOREX FRAUD. Show all posts
Showing posts with label ALLEGED FOREX FRAUD. Show all posts

Sunday, June 10, 2012

NEVADA RESIDENT AND COMPANY TO PAY $2.6 MILLION TO SETTLE ALLEGED FOREIGN CURRENCY TRADING FRAUD WITH CFTC


FROM:  COMMODITY FUTURES TRADING COMMISSION
CFTC Orders Nevada Resident Luis Salazar-Correa and His Company, Prosperity Team, LLC, to Pay More than $2.6 Million to Settle CFTC Anti-fraud Forex Action
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today filed and simultaneously settled charges against Luis Salazar-Correa of Las Vegas, Nev., and his Nevada-based company, Prosperity Team, LLC, for fraudulently soliciting individuals to participate in a pooled investment vehicle, misappropriating customer funds, and issuing false statements to conceal trading losses and the fraud.

The CFTC order requires Salazar-Correa and Prosperity Team jointly and severally to pay a $1 million civil monetary penalty and restitution of $1,641,000. The order permanently prohibits Salazar-Correa and Prosperity Team from engaging in certain commodity-related activities, including trading, and from registering or seeking exemption from registration with the CFTC. The order also permanently prohibits the respondents from further violations of the Commodity Exchange Act, as charged.

The order finds that from about February 2009 through at least June 2010, Salazar-Correa and Prosperity Team fraudulently solicited and accepted at least $2,482,000 from at least 183 customers primarily for the purpose of trading leveraged or margined off-exchange foreign currency (forex) contracts through a pool investment vehicle, also known as Prosperity Team. In soliciting potential customers, Salazar-Correa falsely guaranteed monthly returns varying from 10 percent to 25 percent, depending on the amount invested, and misrepresented the risks of trading forex, the order finds.

Rather than achieving the claimed returns, the respondents consistently sustained trading losses, which cumulated in overall losses of approximately $1,566,000, and operated a Ponzi scheme by misappropriating customers’ funds to make payments to other customers, the order finds.

Salazar-Correa and Prosperity Team concealed the massive trading losses and their misappropriation of customer funds by issuing false statements, which were accessible to customers online through Prosperity Team’s website, the order finds.
The CFTC appreciates the assistance of the U.S. Attorney’s Office and Federal Bureau of Investigation in Las Vegas, Nev., the U.S. Securities and Exchange Commission, the Cyprus Securities and Exchange Commission, the International Financial Services Commission of Belize, the Swiss Financial Market Supervisory Authority, and the U.K. Financial Services Authority.

CFTC Division of Enforcement staff members responsible for this case are Alison Wilson, Jonathan Huth, Heather Johnson, Brandon Tasco, Gretchen L. Lowe, and Vincent A. McGonag

Friday, May 11, 2012

WALL STREET FIRM CHARGED WITH FOREX FRAUD


Photo:  Currency Sign.  Credit:  Wikimedia
FROM:  COMMODITIES FUTURES TRADING COMMISSION
CFTC Charges New York Firm Madison Dean, Inc., and its Principals, George Athanasatos and Laurence Dodge, with Forex Fraud

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action in the U.S. District Court for the Eastern District of New York charging Madison Dean, Inc. (Madison Dean), of Wantagh, N.Y., and its principals, George Athanasatos, also of Wantagh, and Laurence Dodge of Fresh Meadows, N.Y., with fraudulently soliciting approximately 19 persons to invest approximately $415,000 in managed trading accounts to trade off-exchange foreign currency (forex) contracts on a leverage or margined basis. None of the defendants has ever been registered with the CFTC.

The CFTC complaint, filed on May 8, 2012, alleges that from approximately December 2008 through approximately July 2010, defendants Madison Dean, Athanasatos, and Dodge, through an Internet website, written solicitation materials, and other actions, misrepresented and omitted material facts about Madison Dean, including the background and qualifications of Madison Dean employees and the firm’s performance record, to create a false impression that it was a well-established and successful company.

Specifically, according to the complaint, the defendants allegedly fraudulently claimed that 1) Madison Dean had been in existence since 1998, 2) Madison Dean’s customers included high net worth individuals, financial institutions, and institutional clients, 3) Madison Dean provided “professional money managers” who would be in charge of the forex trading for the customers’ managed accounts, and 4) Madison Dean had been making money for its customers for years.

Contrary to these claims, Madison Dean had not been making money for its customers for years, as it did not exist prior to December 2008, and its customers were “neither high net worth individuals, financial institutional or other institutional clients, hedge funds, nor millionaires,” according to the complaint. Also, according to the complaint, Madison Dean did not have professional money managers in charge of customer trading. Rather, Athansatos allegedly managed the trading of customer accounts, and on various occasions, Dodge and Athanasatos’ mother – neither a professional money manager – also traded customer accounts.

The complaint further alleges that Madison Dean’s customers lost approximately $250,000, “as a result of its poor trading.” As further alleged, after being in operation for a little over a year, during which time the firm collected approximately $112,000 in commissions and fees, Madison Dean shut down its operation with no notice to its customers and no way for those customers to contact the company or anyone associated with it.

In its continuing litigation, the CFTC seeks civil monetary penalties, restitution, disgorgement of ill-gotten gains, trading and registration bans, and preliminary and permanent injunctions against further violations of the Commodity Exchange Act, as charged.
The CFTC appreciates the assistance of the United Kingdom Financial Services Authority in this matter.

CFTC Division of Enforcement staff members responsible for this case are Alan I. Edelman, James H. Holl, III, Michelle Bougas, Gretchen L. Lowe, and Vincent McGonagle.

Monday, April 30, 2012

FEDERAL COURT ORDER SETTLES $85 MILLION FOREX FRAUD ACTION


FROM:  COMMODITY FUTURES TRADING COMMISSION
Federal Court Enters Order Settling CFTC $85 Million Forex Fraud Action against California Resident Peter Son and his Companies SNC Asset Management, Inc. and SNC Investments, Inc.

Defendants ordered to pay $5 million civil monetary penalty
Son pleaded guilty to federal charges in related criminal action and was sentenced to 180 months in prison and ordered to pay over $60 million in restitution
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court supplemental consent order requiring defendants Peter Son (Son) of Danville, Calif., and his companies, SNC Asset Management, Inc., and SNC Investments, Inc., to pay a $5 million civil monetary penalty. The court also ordered Son’s wife, relief defendant Ann Lee (Lee), to disgorge $300,000 of ill-gotten gains. The court’s supplemental consent order, entered on April 19, 2012, by Judge Maxine M. Chesney of the U.S. District Court for the Northern District of California, resolves a CFTC complaint that charged the defendants with operating an $85 million fraudulent foreign currency (forex) scam. The CFTC complaint named Lee as a relief defendant because she received monthly funds as purported wages, although she performed no services for SNC.

The supplemental consent order recognizes that an order of restitution in excess of $60 million was imposed on Son in a related criminal action. The supplemental order follows a consent order of permanent injunction entered by the court on May 13, 2011, which established the defendants’ liability, and permanently barred the defendants from engaging in certain commodity-related activities and from future registration with the CFTC, among other things.

According to the May 13, 2011, consent order, the defendants fraudulently solicited at least $85 million from at least 500 customers to trade forex. The defendants in their solicitations falsely claimed to be operating successful forex trading firms and guaranteed monthly returns generated by their trading, the order finds. These representations, and subsequent fictitious account statements depicting profitable returns on individual accounts, created the false impression that the defendants were trading forex profitably, the order finds. At best, however, only a small percentage of the $85 million solicited was traded and the defendants’ limited trading resulted in overall losses, according to the order.

Rather than trade on behalf of customers, the defendants misappropriated customer funds to pay purported profits and principal to customers, to pay money to Son’s wife, and for personal expenses such as mortgage payments, country club dues, and homeowner dues, the order finds.

On April 9, 2010, in a related criminal action, Son pleaded guilty to conspiracy to commit wire fraud and conspiracy to commit money laundering (United States v. Peter C. Son, No. CR 09-00755 DLJ (N.D. Cal. filed July 27, 2009)).  On July 30, 2010, Son was sentenced to 180 months in prison.  On October 25, 2011, Son was ordered to pay restitution of $60,302,886.59 as part of the criminal judgment.

The CFTC appreciates the assistance of the National Futures Association, the US Attorney for the Northern District of California, the Securities and Exchange Commission, and the Financial Supervisory Service of Korea.

CFTC Division of Enforcement staff members responsible for this case are Timothy M. Kirby, Brian G. Mulherin, Kevin K. Batteh, Kara Mucha, Gretchen L. Lowe, and Vincent A. McGonagle.

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