Recent enforcement actions:
Federal court orders Alex Ekdeshman and Paramount Management to pay over $2.4 million for fraudulent foreign currency scheme
The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent order against Alex Ekdeshman of Holmdel, N.J., and Paramount Management, LLC, requiring them to pay $1,146,000 in restitution to their defrauded customers and a $1,337,000 civil monetary penalty. This order also imposes permanent trading and registration bans against the defendants and prohibits them from violating the anti-fraud provisions of the Commodity Exchange Act (CEA), as charged.
The order was entered on Sept.9, 2013, by U.S. District Judge Colleen McMahon of the Southern District of New York and stems from a CFTC complaint filed against the defendants on June 26, 2013 that charged Ekdeshman, individually and as the agent of Paramount, with solicitation fraud and misappropriating “the vast majority” of customer funds for business expenses. Specifically, the complaint charged the defendants with operating a fraudulent scheme that solicited more than $1.3 million from approximately 110 retail customers to engage in leveraged or margined foreign currency transactions with unregistered off-shore counterparties. The defendants allegedly advised customers that forex trading accounts would be opened in the customer’s name and would be traded by the defendants on behalf of the customer.
Furthermore, the defendants, through a telemarketing sales force and a “performance record” linked to their website, touted Paramount’s successful trading record as having yielded an average monthly return of 4.6% over a 20-month period, based on the performance of Paramount’s proprietary trading software system, according to the CFTC.
However, the court’s order finds that, contrary to the claims made during the solicitations, the defendants did not manage or trade any customer account, and thus Paramount’s customers neither made actual purchases of any forex nor received delivery of forex. The order also finds that the defendants misappropriated all customer funds for Ekdeshman’s personal benefit and failed to disclose to actual or prospective customers that they were misappropriating customer funds. To conceal their fraud, the order finds that, during all phases of the scheme, the defendants issued false account statements to their customers, as no individual customer accounts were ever created and no profits were ever generated.
CFTC orders Isaac Grossman and London Metals Market to pay over $121,000
The CFTC issued an order filing and simultaneously settling charges against Isaac Grossman, a resident of Parkland, Fla., and his company, London Metals Market LLC,of Deerfield Beach, Fla., for engaging in illegal, off-exchange precious metals transactions.
The CFTC order requires Grossman and London Metals to pay $121,665.75 in restitution to their customers. In addition, the order imposes permanent registration and trading bans on Grossman and London Metals.
As explained in the order, financed transactions in commodities with retail customers, like those engaged in by London Metals, must be executed on or subject to the rules of an exchange approved by the CFTC. The CFTC found that, from September 2012 through February 2013, London Metals solicited retail customers to buy and sell precious metals on a financed basis.
According to the CFTC, Grossman directly solicited customers and supervised London Metals’ other telemarketers. In making their solicitations, Grossman and the other London Metals telemarketers represented that customers could purchase a desired quantity of precious metals with a 25% deposit, and borrow the remaining 75%, as well as pay a finance charge on the loan, a service charge, a commission, and a mark-up on the spot price of the metal.