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CFTC orders Houston company to pay over $940,000 in fraud case

On Behalf of | Oct 14, 2022 | White-Collar Crimes |

One of the most obscure federal government agencies is the Commodities Futures Trading Commission (CFTC). The agency was created in 1936 to police the commodities futures market. The commodities futures market does not involve the buying and selling of actual commodities; instead, commodities futures represent a future market condition, and investors hope to outwit the market by buying or selling a contract to sell or buy a particular commodity at a price that is better than the market price.

The commodities futures market presents a lucrative opportunity for various kinds of fraudulent conduct. The CFTC recently issued an order that may remind many commodities investors of its presence in a very forceful way.

The case

The CFTC order announced the entry of an injunction and imposition of monetary sanctions in a case that began in June of 2021. In beginning its investigation, the CFTC charged the defendants—a Houston resident and the company he founded—with several counts of fraud involving “forex” accounts; forex accounts involve speculating on international exchanges of currency. The defendants marketed a scheme that they called the “Forex Savings Accounts.”

The CFTC charged the defendants with using the Internet, including various websites and social media platforms, to advertise their investment vehicle as a version of a savings account that offered a greater yield than most bank savings accounts with very low or no risk. The CFTC also alleged that the defendants guaranteed 100% of their investors’ accounts and a “100% certainty” that they would earn a profit on their accounts, even though no forex trader can guarantee a profit. Finally, the CFTC charged the defendants with failing to register their business as a commodity pool in violation of CFTC regulations.

The settlement

According to the CFTC’s press release, the defendants agreed to pay $643,570 in restitution to their victims and to pay a $300,000 civil penalty to the CFTC. The consent decree also permanently prohibited the individual defendant and his corporation from further violations of the Commodity Exchange Act and the CVTC regulations.

Sound advice from a knowledgeable attorney

A CFTC investigation may not end with a jail sentence, but it is almost certain to conclude with the imposition of significant financial sanctions. Anyone involved in defending against a CFTC investigation may wish to consult a criminal defense attorney with experience in handling white collar crime and fraud cases.