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Screenshot of a breaking news alert e-mail from Q2 2017
The U.S. Commodity Futures Trading Commission (CFTC) today announced that on January 29, 2016, the Honorable Richard M. Berman, U.S. District Judge for the U.S. District Court for the Southern District of New York, ordered Defendants 4X Solutions, Inc. (4X) and its principal, Whileon Chay, both of New York City, jointly and severally to disgorge $2,745,226 and pay a civil monetary penalty of $8,235,678 in connection with a forex trading Ponzi scheme from April of 2013.
On April 17, 2015, Judge Berman entered an Order of Default Judgment and Permanent Injunction against 4X and Chay and referred the case to Chief Magistrate Judge Frank Maas for a Report and Recommendation concerning the appropriate disgorgement amount and civil monetary penalty. On January 29, 2016, Judge Berman adopted Judge Maas’s recommendation and ordered disgorgement and a civil monetary penalty in the amounts sought by the CFTC.
In the April 17, 2015 Default Judgment Order, Judge Berman found that Chay and 4X fraudulently solicited $4.8 million from at least 19 pool participants by falsely enticing prospective participants with the prospect of earning returns of 24 percent to 36 percent per year and claiming the ability to profit even in adverse market conditions, “when most have lost and lost dearly.” The Court also found that Chay and 4X minimized the risks of forex trading, claiming, for example, that the Defendants had not suffered a single losing month in 14 years and that 4X provides “a safe haven in our current financial environment.”
According to the Default Judgment Order, Chay, who controlled 4X, lost approximately $1,985,754 trading forex and misappropriated $2,745,226 to pay Chay’s personal expenses, trade securities, fund 4X’s operations, and make purported profit and investment return payments to pool participants.
On January 29, 2016, Judge Berman ordered that Chay and 4X disgorge the $2,745,226 they misappropriated from pool participants and pay a civil monetary penalty of $8,235,678, three times the amount Defendants misappropriated.
For the official release click here.