The U.S. Commodity Futures Trading Commission (CFTC) has been diligently taking down fraudulent activity, as usual, with a focus on forex, and some recent big hits everywhere.
On Feb. 27, 2007, the United States District Court for the Southern District of New York issued a consent order of permanent injunction against Commodity Investment Group, Inc. (CIG) of Ft. Lauderdale, Florida, and others. The consent order establishes restitution and monetary penalties totaling $21,819,785.
The consent order stems from the complaint filed by the CFTC on June 21, 2005 alleging that from at least February 2001, CIG, by and through its employees, misrepresented the likelihood of profits from trading commodity options and minimized the risk of loss. As well, in light of profit representations they made, CIG employees failed to disclose that more than 90% of CIG’s approximately 1,200 customers lost money trading commodity options. Indeed, from February 2001 through December 2005, CIG customers more than $11 million. The consent order requires CIG to pay $11,819,785 in restitution to its customers.
Also, Joel Nathan Ward, the founder of Learn: Forex Inc. and the Joel Nathan Forex Fund have been indicted on multiple charges of fraud and money laundering. According to a statement by prosecuting attorneys Benjamin B. Wagner and Ellen V. Endrizzi, Ward bilked friends, relatives and customers enrolled in his Learn: Forex program out of millions of dollars, issued false account statements and made Ponzi style payments to investors. According to prosecutors, Ward confessed to the thefts in several e-mails to his victims and referred to himself in a hand-written journal, seized during the execution of a search warrant, as a “financial serial killer” and “just another scumbag con artist bilking old people out of their retirement money.”
In a separate scheme, Ward allegedly defrauded investors in a Mississippi real estate investment project.
CFTC Commissioner Mike Dunne talked about a stronger effort against forex fraud. “I want to hunt them down and put them behind bars for good,” Dunne said during a press conference at the FIA conference in Boca Raton. The CFTC has become more aggressive in investigating forex fraud. The have set up a bogus Internet site to mimic many of the bucket shops they are going after to warn investors of Forex scams.
The CFTC also put an end to bogus Web sites that promoted commodity futures and options trading via fictitious U.S. futures exchanges, phony brokerage firms and a fake U.S. futures regulator, all which duped customers out of millions of dollars.
The CFTC filed four enforcement actions against New York Options Exchange (Nyoex), Tahoe Futures (Tahoe), International Energy Exchange (Intenx), Vitol Capital Management (Vitol), New York Petroleum Option Exchange (Nypoe), HPR Commodities (HPR), American Futures and Options Exchange (Afoex), Metro Financials (Metro), and American Futures and Options Trading Commission (AFOTC) alleging fraud in the solicitation of customers to purchase commodity futures and options contracts.
In each of the cases, customers were solicited to trade commodity futures and/or options, including on energy and currency. Customers were duped into believing that Nyoex, Intenx, Nypoe and Afoex are futures exchanges; Tahoe, Vitol, HPR and Metro are their respective brokers; and all these entities are located in the United States.