CFTC gets $17.5 million court order against Dorian Garcia and his companies for FX ponzi scheme fraud

Federal regulator U.S. Commodity Futures Trading Commission (CFTC) today announced that the U.S. District Court for the Middle District of Florida entered a final Judgment on June 28, 2016, requiring Dorian Garcia and his companies DG Wealth Management (DG Wealth), Macroquantum Capital LLC, UKUSA Currency Fund, and DG Wealth’s successor, Quanttra LP, all of Naples, Florida, jointly to pay restitution totaling $5,051,052 to defrauded investors victimized in a Ponzi scheme they operated from 2010 to 2015. The Judgment also requires the Defendants jointly to pay a $7.5 million civil monetary penalty and to disgorge $4,948,571 in ill-gotten gains.

The Court’s Judgment follows two previous orders entered by Judge Sheri Polster Chappell stemming from a CFTC Complaint filed April 14, 2015 that charged Garcia and his companies with 1) fraud in connection with solicitation of customers for their foreign currency (forex) and commodity options trading pools, 2) misappropriation of customer funds, 3) issuing false account statements, and 4) violating CFTC registration requirements.

Garcia Issued False Account and Bank Statements and Misappropriated Investor Funds, Court Finds

CFTC buildingSpecifically, the CFTC found that Garcia, who had no proven track record, issued false account and bank statements to entice investors, showing exaggerated multi-million dollar account balances and profits that he purportedly made. Garcia solicited more than $7.3 million from at least 95 investors, with a shortfall of approximately $3.3 million, some of which was used by Garcia to pay for his personal and business expenses. Garcia mislead investors and prospective investors by claiming that he did not have to be registered with the CFTC to trade for their accounts and falsely claimed that he had retained a licensed broker who would place customers’ orders by following Garcia’s trading system.

Parallel Criminal Case

In a parallel criminal case, on July 14, 2015, the Court accepted Garcia’s written plea agreement on a charge of wire fraud. The Court sentenced Garcia to a prison term of 78 months and a forfeiture of more than $3 million. On June 21, 2016, Garcia entered into a stipulation agreeing to pay $5,318,052.02 in criminal restitution. The June 17, 2016 Order in the CFTC’s case recognized the criminal action and provides that the Defendants shall receive a dollar-for-dollar credit against their restitution obligation for any payments Garcia makes to investors pursuant to the criminal restitution order.

The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets.  The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

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