FOREIGN CURRENCY PONZI SCHEMERS ORDERED TO PAY $76 MILLION

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 

Court Orders $76 Million in Civil Monetary Penalties against Keith F. Simmons, Deanna Salazar and Their Companies in Connection with Foreign Currency Ponzi Scheme

In Related Criminal Actions, Simmons Sentenced to 40 Years’ and Salazar Sentenced to 4.5 Years’ Incarceration and Ordered to Pay in Total $40 Million in Criminal Restitution

Both Simmons and Salazar Currently are Serving Their Prison Sentences

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Robert J. Conrad, Jr. of the U.S. District Court for the Western District of North Carolina entered separate Consent Orders (Orders) against Defendants Keith F. Simmons and his company, Black Diamond Capital Solutions, LLC, and Deanna Salazar and her companies, Life Plus Group, LLC and Black Diamond Holdings, LLC, imposing a total of $76 million in civil monetary penalties in connection with a foreign currency exchange (forex) scheme in violation of the Commodity Exchange Act (CEA). The Orders also impose permanent trading and registration bans on the Defendants and prohibit them from further violations of the anti-fraud provisions of the CEA, as charged.

Simmons was a resident of West Jefferson, North Carolina, and Salazar was a resident of Yucca Valley, California.

The Orders arise out of a CFTC Complaint, filed on January 13, 2011, charging Simmons, Salazar, and their companies with fraudulent solicitation and misappropriation of customer funds in connection with a Ponzi-style scheme involving forex trading (see CFTC Press Release and Complaint 5985-11, February 16, 2011). Also charged in the CFTC complaint are Bryan Coats of Clayton, North Carolina and his company, Genesis Wealth Management, LLC, and Jonathan Davey of Newark, Ohio and his companies, Divine Circulation Services, LLC, Divine Stewardship, LLC, Safe Harbor Ventures, Inc., Safe Harbor Wealth Investments, Inc., and Safe Harbor Wealth, Inc. The CFTC’s litigation against these Defendants is ongoing.

The Orders find that from at least April 2007 through at least 2009, Simmons and Salazar, acting through their companies and with others, fraudulently solicited and accepted at least $35 million from at least 240 individuals to engage in off-exchange forex trading through a trading platform known as Black Diamond. In fact, according to the Orders, no forex trading was ever conducted through the Black Diamond trading platform, and the Black Diamond trading platform never existed. Rather, Simmons and Salazar misappropriated millions of dollars of customer funds to make purported profit payments to customers, as is typical of a Ponzi scheme, and for personal and unrelated business expenses, according to the Orders. The Orders further find that to conceal their fraud, Simmons, with the assistance of Salazar, issued false customer account statements reflecting the promised returns or more based on Black Diamond’s purportedly successful forex trading.

In a related criminal action brought by the U.S. Attorney’s Office for the Western District of North Carolina, Simmons was convicted on December 16, 2010, on charges of securities fraud, wire fraud, and money laundering. Simmons was sentenced to 40 years’ incarceration and ordered to pay criminal restitution of $35 million. On December 7, 2010, Salazar pleaded guilty to charges of investment fraud conspiracy and tax evasion. Salazar was sentenced to 4.5 years’ incarceration and ordered to pay $5 million in criminal restitution. Both Simmons and Salazar are still serving their sentences.

CFTC Division of Enforcement staff members responsible for this case are Alan Edelman, Maura Viehmeyer, James H. Holl III, Gretchen L. Lowe, and Rick Glaser. The Division would like to thank the U.S. Attorney’s Office for the Western District of North Carolina and the Federal Bureau of Investigation for their cooperation in this matter.

CFTC CHARGES ALLEGED FLORIDA PONZI SCHEME OPERATOR WITH FRAUD AND REGISTRATION VIOLATIONS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION
April 20, 2015

CFTC Charges Florida Resident Dorian A. Garcia and his Companies, DG Wealth Management, Macroquantum Capital LLC, and UKUSA Currency Fund LP with Fraud and Registration Violations

Garcia Allegedly Operated a Ponzi Scheme in Connection with Forex and Options Pools and Stole Approximately $2.5 Million Invested by Customers

Federal Court Enters Emergency Order Freezing Defendants’ Assets and Protecting Books and Records

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced that Judge Sheri Polster Chappell of the U.S. District Court for the Middle District of Florida entered an emergency restraining Order freezing assets and prohibiting the destruction or concealment of books and records of Defendants Dorian A. Garcia, and his companies, DG Wealth Management (DG Wealth), Macroquantum Capital LLC, and UKUSA Currency Fund LP, all of Naples, Florida. The judge set a hearing date for April 29, 2015.

The Court’s Order arises from a CFTC Complaint filed under seal on April 14, 2015, charging the Defendants with fraud in connection with their solicitation of customers for their foreign currency (forex) and options trading pools, misappropriation of customer funds, and their issuance of false statements and registration violations, in violation of the Commodity Exchange Act and CFTC Regulations.

According to the CFTC Complaint, the Defendants fraudulently solicited approximately $4.7 million from at least 80 customers to invest in forex and options pools beginning as early as May 2010. The Complaint alleges that Garcia made a number of misrepresentations to those he solicited, including: (1) falsely promising them that their principal was protected with a large collateral account; (2) misrepresenting the total amount of funds he had under management; (3) falsely reporting large profits in existing trading accounts; and (4) failing to disclose that he misappropriated investor funds. Many of Garcia’s misrepresentations were contained within bank and trading firm account statements that he emailed to investors that were falsified to reflect exaggerated account balances.

The CFTC Complaint alleges that Garcia returned nearly $2.1 million to investors in a manner akin to a Ponzi scheme and misappropriated approximately $2.5 million of investor funds. Garcia used the misappropriated funds for his personal and business expenses such as art, domestic help, jewelry, and cash transfers to his personal bank accounts, according to the Complaint.

The Complaint also alleges that Garcia and DG Wealth acted in capacities requiring them to register with the Commission, but were not registered with the CFTC, as required.

In its continuing litigation, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and a permanent injunction against further violations of federal commodities laws, as charged.

The CFTC appreciates the assistance of the Florida Office of Financial Regulation, Bureau of Financial Investigations, Miami, Florida.

CFTC Division of Enforcement staff members responsible for this case are Susan Padove, Ashley Burden, Mary Elizabeth Spear, Ava M. Gould, Scott R. Williamson, and Rosemary Hollinger.

COURT ORDERS $4.8 MILLION IN FINES AGAINST COMPANY, PRINCIPALS FOR ISSUING FALSE ACCOUNT STATEMENTS IN A FOREX FUND

FROM:  CFTC
Federal Court in Texas Orders Total Call Group, Inc. and its Principals to Pay over $4.8 Million in Fines for Making False Representations and Issuing False Account Statements in Forex Fraud
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that a federal court entered an order of default judgment and permanent injunction against Total Call Group, Inc. (aka TPFX, Inc., Power Play FX) of Frisco, Texas, and its principals, Craig B. Poe, also of Frisco, and Thomas Patrick Thurmond (aka Patrick Thurmond) of San Antonio, Texas.

The court’s order requires Poe and Thurmond, respectively, to pay a civil monetary penalty of $3.24 million and $1.62 million and holds Total Call Group jointly and severally liable for the payment of these amounts.

The order, entered on March 30, 2012, by Judge Richard A. Schell of the U.S. District Court for the Eastern District of Texas, stems from a CFTC enforcement action filed on September 29, 2010, that charged the defendants with issuing false customer account statements in connection with an off-exchange foreign currency (forex) fraud (see CFTC Press Release 5908-10).

The order finds that, beginning in early 2006 and continuing until October 2008, the defendants solicited approximately $808,000 from at least four customers to trade forex. In soliciting the funds, Thurmond made false representations to one or more of Total Call Group’s customers, including that Poe had been trading forex and living off the income for over four years, and that he and Poe had personally provided over $1 million to Total Call Group, according to the order.

At the end of August 2008, the defendants sustained trading losses and incurred trading fees amounting to approximately 90 percent of the then current balance of the trading accounts, according to the order. However, the defendants did not report these substantial losses to customers, but instead continued to promote the profitability of trading and solicited additional funds, the order finds.

In September through December 2008, the order finds that the defendants traded and lost almost all of the remaining funds in the trading accounts. Despite these losses, Poe sent false account statements to customers, including several false statements after the trading accounts were fully liquidated in November 2008, that collectively reflected a positive balance of over $750,000 in Total Call Group’s forex trading accounts.

CFTC Division of Enforcement staff members responsible for this action are Patrick M. Pericak, Daniel Jordan, Eugenia Vroustouris, Jessica Harris, Michael Loconte, Rick Glaser and Richard B. Wagner.

TEXAS MAN TO PAY $31 MILLION FOR PART IN FOREIGN CURRENCY TRADING SCHEME

The following excerpt is from the CFTC website:

“Federal Court Orders Texas Resident Robert D. Watson to Pay $31 Million for Defrauding Customers, Misappropriating Millions of Dollars, and Providing Fictitious Records in Forex Scheme
Watson’s business entities ordered to pay disgorgement of $21 million, and Texas resident Daniel J. Petroski ordered to pay more than $550,000 for his role in the scheme

In a related criminal matter, Watson was sentenced to 20 years in prison on February 10, 2012
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained federal court consent orders resolving its remaining claims against defendants Robert D. Watson and Daniel J. Petroski, both of Houston, Texas, PrivateFX Global One Ltd., SA, and 36 Holdings Ltd. Global One, a corporation formed in Panama, and 36 Holdings are under the control of a court-appointed receiver, Thomas L. Taylor III.

The consent orders, both entered on February 2, 2012, by the U.S. District Court for the Southern District of Texas, stem from a CFTC complaint filed in the same court on May 21, 2009, charging the defendants with operating a multi-million dollar fraudulent off-exchange foreign currency (forex) scheme (see CFTC Press Release 5661-09, May 26, 2009).

One consent order requires Watson, Global One, and 36 Holdings jointly and severally to pay $21 million in disgorgement and orders Watson to pay a $10 million civil monetary penalty. The other consent order requires Petroski to pay $414,723 in disgorgement and a $140,000 civil monetary penalty. The consent orders also require the defendants to give up their rights to funds and other assets held by the receiver.

The court previously entered a consent order of permanent injunction on February 24, 2010, that resolved liability against all defendants and permanently barred the defendants from engaging in any commodity-related activity and from registering with the CFTC. This earlier order found that on or about July 1, 2006, defendants began soliciting investors to purchase shares of Global One, whose purported objective was to speculate in the forex markets. Global One’s offering raised approximately $21 million from at least 80 investors by touting Global One’s purportedly successful forex trading performance, according to the order. From April 2006 through April 2009, the defendants reported monthly returns, purportedly generated through forex trading, to Global One investors of approximately 1.5 percent to nearly 3 percent and claimed to never have had a losing month trading forex, the court found. However, also according to the order, the defendants’ representations to Global One investors regarding Global One’s extraordinary forex trading profits and related returns to investors were false.
The earlier consent order also found that, prior to the filing of the CFTC’s complaint, the defendants provided the CFTC with fictitious third-party bank and forex trading records prepared by Watson to conceal the fraud.

In a related criminal matter, filed in the U.S. District Court for the Southern District of Texas as part of President Barack Obama’s Financial Fraud Enforcement Task Force, Watson pleaded guilty to one count of securities fraud. On February 10, 2012, the court sentenced Watson to the statutory maximum of 20 years in prison.
The CFTC thanks the Fort Worth Regional Office of the Securities and Exchange Commission for its assistance.

CFTC Division of Enforcement staff members responsible for this case are Christopher Reed, Charles Marvine, Rick Glaser, and Richard Wagner“.

CFTC ASSERTS THAT TEXAS MAN OPERATED FRAUDULENT FOREIGN CURRENCY BUSINESS

The following excerpt is from the CFTC website:

February 8, 2012
“Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of an enforcement action against Christopher B. Cornett of Buda, Texas, charging him with solicitation fraud, issuing false account statements, misappropriating pool participants’ funds, and failing to register in connection with an off-exchange foreign currency (forex) fraud.

According to the CFTC complaint, filed on February 2, 2012, in the U.S. District Court for the Western District of Texas, from at least June 2008 through at least October 2011, Cornett solicited prospective pool participants to provide funds for a pooled investment in forex. Cornett acted as the manager and operator of the pool, which was referred to at various times as ITLDU, ICM, International Forex Management, LLC and/or IFM, LLC. In soliciting prospective pool participants for the forex pool, Cornett allegedly falsely told prospective pool participants that, while there were weeks when Cornett either lost money or broke even trading forex, Cornett had never experienced a losing month or a losing year trading forex.

During the period from June 18, 2008, through September 2010, Cornett allegedly solicited approximately $7.07 million from pool participants, pool participants redeemed approximately $1.64 million and Cornett lost approximately $4.17 million of the pool’s funds trading forex. During this period, Cornett allegedly had only one profitable month trading forex with pool funds. As a result, Cornett allegedly misappropriated approximately $1.26 million of the pool’s funds. Furthermore, most, if not all, of the profits, losses and account balances that Cornett reported to pool participants were false, according to the complaint.

From October 2010 through October 2011, Cornett allegedly solicited an additional approximately $6.95 million from pool participants, and pool participants redeemed an additional approximately $2.22 million. During this period, Cornett transferred approximately $1.81 million of pool participant funds to accounts at three foreign firms and lost all but approximately $1,600 trading forex, according to the complaint. Cornett also is alleged to have transferred approximately $1.56 million of pool participant funds to three additional foreign firms during this period. Because Cornett was acting as a commodity pool operator (CPO) from October 18, 2010, through at least October 13, 2011, he was required to be registered as a CPO. As of October 13, 2011, Cornett allegedly had failed to register as a CPO.

In the litigation, the CFTC seeks restitution, disgorgement, civil monetary penalties, trading and registration bans and a permanent injunction prohibiting further violations of the federal commodities laws.

The CFTC appreciates the assistance of the U.K. Financial Services Authority, the British Virgin Islands Financial Services Commission, the Ontario Securities Commission, Germany’s BaFin, and the Swiss Financial Market Supervisory Authority.”