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Screenshot of a breaking news alert e-mail from Q2 2017
The U.S. Commodity Futures Trading Commission (CFTC) has announced that Judge Esther Salas of the U.S. District Court for the District of New Jersey has entered an Order of default judgment and permanent injunction against Alcibiades Cifuentes and Jennifer Wee Cifuentes, both of West New York, New Jersey, and their corporate entity, Cifuentes Fund Management, LLC.
The Order, entered on April 20, 2018, finds that from at least April 2013 through March 2015, the Defendants devised a sham commodity pool trading in off-exchange foreign currency (forex) contracts. To solicit pool participants to transfer funds to them, the Defendants made false statements, fabricated account documents, and established a practice, or “demo,” forex trading account that involved no actual funds and posed no risk of loss. The Defendants posted “profitable” trades from the demo account online and falsely represented them to be the Defendants’ actual trades, without disclosing that the demo account had sustained “losses” exceeding $5 million.
The Court determined that the “Defendants knowingly stole all of the money entrusted to them by spending it on themselves or passing it to other victims, often within a day of the funds clearing their accounts.” As described in the Order, Cifuentes and Wee misappropriated pool participants’ funds by purchasing luxury vehicles, jewelry, and clothing for themselves. The Defendants also used pool participants’ funds to make Ponzi scheme-like payments to other victims.
The Order requires the Defendants to pay, on a joint and several basis, $457,120 in restitution to pool participants, as well as a civil monetary penalty of $1,770,000, plus post-judgment interest on both amounts. As a result of the “intentional and egregious nature of the Defendants’ fraudulent conduct,” the Order also permanently bans the Defendants from the markets the CFTC regulates, and permanently enjoins them from future violations of the Commodity Exchange Act and CFTC Regulations, as charged.
The Order stems from a CFTC Complaint filed on September 30, 2016 (see CFTC Complaint and Press Release 7463-16), which charged the Defendants with forex fraud, fraud by a commodity pool operator, and failing to register with the CFTC.
The U.S. Attorney’s Office for the District of New Jersey has obtained a criminal indictment against Cifuentes and Wee, charging them with one count of wire fraud conspiracy, four counts of wire fraud, and one count of embezzlement and theft by a commodity pool operator. United States v. Alcibiades Cifuentes and Jennifer Wee Cifuentes, No. 17-cr-00187-ES (D.N.J. May 18, 2017). The conspiracy and wire fraud charges each carry a maximum penalty of 20 years imprisonment and a $250,000 fine, while the commodity pool operator embezzlement and theft charge carries a maximum penalty of 10 years imprisonment and a $1 million fine, or twice the gross gain or loss from the offense.