US court imposes a $29 million penalty in a forex and binary options pool fraud case

The US court has granted the Commodity Futures Trading Commission (CFTC)’s motion of default judgment against the operators of a forex and binary options pool fraud and. The court imposed a penalty of over $29 million in restitution and fines.

According to the CFTC, California based John D. Black operated the fraudulent scheme with his affiliated entities Financial Tree, Financial Solution Group, and New Money Advisors. The scheme was conducted with the help of other associates – Christopher Mancuso and Joseph Tufo, along with Colorado-based John P. Glenn and his law firm, The Law Firm of John Glenn, P.C.

The court order details that the scheme was operated from 15 June 2015 to 15 June 2020. During this period, the defendants fraudulently solicited pool participants to invest in the binary options and forex commodity pools. However, they misappropriated millions of those investments using them for personal use. They also used some of the money to make Ponzi payments to existing pool participants and published false statements to explain the lack of returns and promised profits.

CFTC fraud

The CFTC further revealed that the operators of the scheme even failed to register as commodity pool operators (CPOs) and associated persons (APs) of CPOs, which is mandatory for operators of such business.

The court found that the defendants are liable for solicitation fraud, multiple CFTC registration violations, and failure to comply with CPO rules.

The court has required nearly $10.5 million to be paid in restitution jointly and severally from all the entities and individuals, except Tufo, who has been ordered to over $4.5 million of that restitution jointly and severally with the other defendants. The court order also requires them to disgorge over $2.6 million, which was received from the scheme.

In terms of monetary penalties, Black and his three affiliates are required to pay around $5.4 million, Mancuso – $12.1 million, Tufo – $680,000 on, Glenn and his law firm – $850,000.

Last week, CFTC added to its RED list 34 unregistered entities offering services in the US illegally without any authorization.

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