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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 the filing of a civil enforcement action in the U.S. District Court for the Eastern District of New York against Defendants Dillon Michael Dean of Longmont, Colorado, and his company The Entrepreneurs Headquarters Limited, a UK-registered company.
The CFTC Complaint charges Dean and The Entrepreneurs Headquarters with engaging in a fraudulent scheme to solicit Bitcoin from members of the public. The charges allege that Dean misrepresented that customer funds would be pooled and invested in products including binary options, and made Ponzi scheme style payments to commodity pool participants from other participants’ funds. Dean also stands charged with misappropriating pool participants’ funds, and failing to register with the CFTC as a Commodity Pool Operator (CPO) and Associated Person of a CPO, as required.
According to Boulder, Colorado news site Daily Camera, Dillon Michael Dean is also the subject of a 270-plus member Facebook group formed by angry clients of The Entrepreneurs Headquarters. A Louisiana-based investor, Collin Bercier, also took out a Craigslist ad in the Boulder area warning people against investing with The Entrepreneurs Headquarters or with another Dean company, Real Trade Profits.
James McDonald, the CFTC’s Director of Enforcement, commented:
Increased public interest in Bitcoin and other virtual currencies has provided new opportunities for bad actors. As alleged in the Complaint, Defendants sought to take advantage of that public interest, offering retail customers the chance to use Bitcoin to invest in binary options, when in reality they were only buying into a Ponzi scheme. As this case shows, the CFTC will continue to take swift action to stop such fraudulent schemes and to hold fraudsters accountable for their misconduct.
Specifically, the Complaint alleges that, from approximately April 2017 through to the present, Dean and The Entrepreneurs Headquarters, which have never been registered with the CFTC in any capacity, have engaged in a fraudulent scheme, through which they solicited at least $1.1 million worth of Bitcoin from more than 600 members of the public. Dean and The Entrepreneurs Headquarters allegedly promised to convert this Bitcoin into fiat currency to invest on the customers’ behalf in a pooled investment vehicle for trading commodity interests, including trading binary options on an online exchange designated as a contract market by the CFTC.
Potential pool participants were solicited to invest with The Entrepreneurs Headquarters by false claims of trading expertise and promises of high rates of return. The Complaint further alleges that, rather than convert customers’ Bitcoin to fiat currency to invest in binary options contracts, as promised, Defendants misappropriated their customers’ funds, including by using the funds to pay other customers, in the manner of a Ponzi scheme.
The Complaint alleges that Dean solicited customer deposits using company websites, YouTube videos, and Facebook posts, where Defendants claimed that customers’ funds would be pooled and invested in commodity options on behalf of customers. Dean claimed “strong skills” in options trading, and that his company was generating high rates of return through trading commodity options, among other false claims. But, as alleged, Dean and The Entrepreneurs Headquarters were not actually engaged in trading on behalf of their customers, with purported trading profits were fictitious. As alleged in the Complaint, The Entrepreneurs Headquarters stopped making payments to its customers, having misappropriated over $1 million in customers’ funds, while Dean has launched another similar purported trading venture under the name Real Trade Profits, using a website to solicit customers to deposit Bitcoin for a pooled investment in binary options trading and promising high rates of return.
In its ongoing litigation, the CFTC seeks restitution to defrauded persons, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC Regulations, as charged.
The CFTC thanks and acknowledges the assistance of the British Columbia Securities Commission.