The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court Order requiring Defendants Michael Alcocer (a U.S. citizen) and his company, InovaTrade, Inc., formerly of Miami and Orlando, Florida and later Panama City, Panama, to pay, jointly and severally, restitution of over $9.6 million and a civil monetary penalty of more than $28.8 million. The Order also imposes permanent trading and registration bans against Alcocer and InovaTrade and permanently prohibits them from further violations of federal commodities law, as charged. Neither Defendant has ever been registered with the CFTC.
The Default Judgment and Permanent Injunction Order was entered on April 5, 2013, by Judge Joan A. Lenard of the U.S. District Court for the Southern District of Florida, and stems from a CFTC Complaint filed on September 21, 2012, that charged Alcocer and InovaTrade with solicitation fraud, providing customers with false statements, and misappropriation in connection with an off-exchange foreign currency (forex) trading scheme (see CFTC Press Release 6532-13, March 14, 2013).
The Order finds that Alcocer and InovaTrade orchestrated a fraudulent scheme that, between November 2008 and September 2011, induced more than 400 customers to deposit more than $10.6 million with InovaTrade, a purported Retail Foreign Exchange Dealer (RFED), to trade forex. Using its website, as well as certain third-party introducing brokers, InovaTrade fraudulently solicited customers, both within and outside the United States, to open retail forex trading accounts — some of which InovaTrade managed and some of which it did not, the Order finds. The Order also finds that Defendants sent InovaTrade customers false statements of trading activity and misappropriated more than $9.6 million of customer funds.
As part of a nationwide forex sweep, the CFTC filed a prior lawsuit against InovaTrade in January 2011, in the U.S. District Court for the Western District of Missouri for its failure to register as an RFED (see CFTC Press Release 5974-11). In July 2011, the U.S. District Court for the Western District of Missouri issued a permanent injunction enjoining InovaTrade from continuing to operate as an RFED with U.S. customers. The April 5, 2013, Order further finds that InovaTrade falsely represented to its customers that the InovaTrade sued by the CFTC in January 2011 was a different entity. In addition, that same Order finds that beginning in or around August 2011, InovaTrade refused to honor any customer withdrawal requests, and in October 2011, Defendants closed InovaTrade’s operations.
The CFTC appreciates the assistance of the Panama Superintendencia del Mercado de Valores (SMV).
CFTC Division of Enforcement staff responsible for this case are Margaret Aisenbrey, Jenny Chapin, Stephen Turley, Mary Lutz, Charles Marvine, Rick Glaser, and Richard Wagner.