US Federal Court imposes $6.6 million penalty in a CFTC binary options pool fraud case

The Commodity Futures Trading has filed a fraud and misappropriation case against William Thomas Caniff, his company, Berkley Capital Management, LLC (BCM) and two investment pools that BCM operated as Delaware limited partnerships, BBOT 1, LP (BBOT) and Berkley II, LP.

The US regulator revealed that the US Federal Court has ordered the defendants to pay $2,598,632 in restitution and a $3.6 million civil monetary penalty in connection with a binary options fraud scheme.

Furthermore, the court has entered a permanent injunction, restitution, and a civil monetary penalty order against Caniff’s partner, Arie Bos. In the official announcement, the CFTC stated that Bos will be liable to pay the $2,598,632 in restitution in addition to a $500,000 civil monetary penalty.

Case Background

According to the CFTC, Caniff parented with Bos in 2016 in BCM. The company offered two pools for trading forex binary options through accounts at NADEX. Caniff, who is known to be a convicted felon, opened a trading account at NADEX by concealing his criminal record.

Between February 2016 through September 2018, 58 pool participants were solicited in the scheme and invested over $3.3 million. All participants in these pools were based in the Netherlands with the exception of one US participant.

CFTC fraud

Instead of investing the funds he received from the pool participants, Caniff used the money to pay himself $1.2 million and Bos $1.1 million.

Caniff sent false treading results to Bos who reported false profits and exaggerated pool values to the investors.

The statement said:

The order finds that Bos committed fraud by ignoring numerous red flags that should have prompted him to seek corroboration of BCM’s purported profits at NADEX. Bos was also found to have issued false BCM account statements to participants.

Criminal Actions

Additionally, Caniff is facing two criminal cases in connection to the binary options fraud scheme with a jury trial for wire fraud and money laundering to take place in October and a case for making a false statement on his application to open a NADEX trading account.

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