CFTC Charges Texas Resident and Six U.S. and Costa Rican Companies with Engaging in Two Fraudulent Schemes Totaling $6 Million

Washington, D.C. — The Commodity Futures Trading Commission today announced the filing of an enforcement action in the U.S. District Court for the Northern District of Texas, charging defendants Rudy Avila and six U.S. and Costa Rican companies with fraudulent solicitation to trade in commodity futures, options on commodity futures, and retail off-exchange foreign currency (derivatives and forex), misappropriation of funds, and issuing false statements.
The six companies charged are The L.I.F.T. Group LLC (LIFT), CIG Internacional Sociedad Anónima ( CIG) and Trading Technologies Group Sociedad Anónima (TTG) organized in Costa Rica, Trading Ventures Group, LLC (TVG), Capital Ventures Group, LLC (CVG), and Ventures Group, LLC (VGL.). The complaint also charges CIG and TVG with failure to register as Commodity Trading Advisors (CTA). 
In the litigation against the defendants, the CFTC seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations.
Case Background
As alleged in the complaint, since at least 2017 and continuing through at least spring of 2020, Avila, LIFT, CIG and TTG, acting through their officers, employees, or agents, engaged in a scheme and artifice to defraud by fraudulently soliciting and obtaining at least $4.2 million from at least 170 CIG clients for the purported purpose of trading derivatives and forex.
The complaint further alleges that in a second scheme, since at least 2019 and continuing to the present, Avila, TVG, CVG and VGL, acting through their officers, employees or agents, engaged in another scheme and artifice to defraud by fraudulently soliciting and obtaining at least $1.8 million from at least 55 TVG clients also for the purported purpose of trading derivatives and forex.
According to the complaint, instead of trading client funds as promised, the defendants obtained and misappropriated funds from CIG and TVG clients by making false material representations and promises and by concealing material information from CIG and TVG clients. For example, the defendants falsely represented and promised their clients that they would use their discretion to trade their funds in derivatives and forex with guaranteed profits. The defendants failed to disclose they were not trading as promised and instead were misappropriating their funds. In the manner of a Ponzi scheme, the defendants used certain client funds to make payments to other CIG and TVG clients. The defendants also provided clients with access to fake trading statements that reflected fictitious trading gains and losses and, in the case of CIG and TVG, represented to their clients that they would manage their client accounts and use their discretion to trade their funds without registering as CTAs as required. 
As alleged, the defendants never traded derivatives and forex on behalf of their clients and, instead, stole most of their clients’ investments. In total, CIG clients lost a total of $3.58 million and TVG clients lost a total of at least $1.773 million. 
Separate, Parallel Criminal Action
In U.S. v. Avila, 3:21-cr-00168-M-1 (BML), a parallel criminal case in the U.S. Court for the Northern District of Texas, Avila pled guilty to one count of wire fraud in violation of 18 U.S.C. § 1343.    
The CFTC thanks the Office of the United States Attorney for the Northern District of Texas, the FBI Dallas/Fort Worth Office, the UK Financial Conduct Authority, and the Financial Services Regulation and Supervision Department of Nevis.
The Division of Enforcement staff members responsible for this case are Xavier Romeu-Matta, Michael Cazakoff, Judith M. Slowly, Steven I. Ringer, Lenel Hickson, Jr., and Manal M. Sultan. 
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CFTC’s Foreign Currency (Forex) Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency (Forex) Trading Fraud Advisory, to help customers identify this sort of scam.
The CFTC also strongly urges the public to verify a company’s registration with the Commission before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online or contact the CFTC Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

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Colville Tribes considers new casino and resort near Azwell

AZWELL — A Colville Tribes’ casino, golf course and concert venue, along with a 100-home development are being considered on a 640-acre property across Highway 97 from Azwell, between Chelan and Pateros.

The Colville Tribal Federal Corporation, which operates casinos in Manson, Omak and Coulee Dam, announced Aug. 6 it had completed a preliminary review of the site, known as MA-18, which boasts views of the Columbia River and easy access to Chelan and the rest of Okanogan County.

“MA-18 has all the features we are looking for when it comes to economic development,” CTFC CEO Kary Nichols stated in a press release. “After discussing with our architects, we are confident that MA-18 could be the home to our new flagship resort, attracting business and tourism from around the Northwest with our state-of-the-art casino, golf course and concert venue.”

The plans also include 100 lots for residential development.

“Housing is becoming increasingly scarce throughout the region and the country,” Nichols said. “MA-18 gives us the opportunity to provide affordable housing for many families while also giving them access to all the great amenities we have planned for MA-18.”

The property is owned almost entirely by the Colville Tribes, said Tony Posey, chief operating officer of Colville Gaming LLC, unlike the property in Manson that is “fractioned,” with many individuals and entities owning some portion of the property. The Manson property includes the Mill Bay Casino, Deepwater Amphitheater and the recently opened RV Park.

“Fractionated ownership and frivolous lawsuits have made it impossible for CTFC to utilize the Manson property to its fullest,” Posey said in a press release. “MA-18 is owned almost entirely by the Colville Tribes, giving us greater flexibility and giving the Tribes a larger share of the profits.”

Profits from CTFC’s enterprises fund the Colville Tribes’ governmental programs, including forest management and firefighting efforts.

“We look forward to the opportunity to bring more jobs, more housing, and more tourism to our community, and we look forward to welcoming everyone to our new resort,” he said.

The Colville Tribal Federal Corporation, headquartered in Omak, is a federally chartered corporation created to oversee the economic development efforts of the Colville Confederated Tribes. The company currently manages two enterprises — gaming and wood products. The corporation employs more than 500 people. Colville Gaming LLC is a tribally chartered limited liability company owned by CTFC which manages the Tribes’ casinos and their amenities, including restaurants and the hotel and spa in Omak.

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$19 Billion Venture Fund Hires CTFC Official Brian Quintenz as Crypto Advisor

Arman Shirinyan
The digital assets venture fund is now reinforced by former CTFC official

One of the biggest digital assets and venture capital start-up funds in the U.S. hires ex-CTFC official Brian Quintenz, who will advise the company on crypto policy issues, Bloomberg reports.

Quintenz will become a part of the team that will work with crypto-related investments. The former CTFC official worked as a Republican commissioner at the commission. The venture capital group has invested in various companies associated with digital assets trading and functioning like Coinbase and Robinhood.

Related
Mastercard Acquires CipherTrace Crypto Intelligence Data Provider

Strengthened regulations coming from Securities and Exchange Commission Chair Gary Gensler forced venture and hedge funds to hire more legal advisors specifically for the digital assets industry that has been steadily growing for over a year. In addition to Quintenz, Andreessen got Bill Hinman, the lead of the filing division at the SEC, and Brent McIntosh, the Treasury Department official for international affairs during the presidency of Donald Trump.

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Quintenz stated that the regulations that are coming now for the cryptocurrency industry are going to be crucial for building a transparent and truly decentralized financial ecosystem that can still be achieved. Former commissioners will act as a bridge between entrepreneurs and regulators.
Previously, Quintenz led the Technology Advisory Committee, which constantly worked with leading companies on digital assets policies. The new addition to the company is being considered a reinforcement since, previously, Quintenz gave the green light to the first-ever listing of futures contracts based on virtual currencies.

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CFTC Files Action to Suspend Registration of Mississippi Man Based on Criminal Charges

Washington, D.C. — The Commodity Futures Trading Commission announced today that it commenced a registration action against Ted Brent Alexander of Jackson, Mississippi. The CFTC action is based on a federal criminal indictment charging Alexander with six felony counts of securities and commodities fraud, conspiracy, and wire fraud.
Alexander has been registered with the CFTC as a commodity trading advisor and associated person since October 2008. The CFTC’s Notice of Intent states that the relevant indictment charges Alexander with the commission of, or participation in, crimes involving violations of federal law that reflect upon his honesty or fitness to act as a fiduciary and that are punishable by imprisonment for a term exceeding one year. Pursuant to the federal commodity laws, Alexander’s registration can be suspended until his criminal matter is completed. If Alexander is found guilty of the charges, his commodity trading advisor and associated person registrations can be permanently revoked.
The Division of Enforcement thanks the National Futures Association for its assistance in this matter.
The Division of Enforcement staff members responsible for this case are Michael Solinsky and Rick Glaser.

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CFTC Staff Provides Temporary No Action Relief from Certain Financial Reporting Requirements to Bank Swap Dealers

Washington, D.C. — The Commodity Futures Trading Commission’s Market Participants Division today issued a time-limited no-action letter concerning capital and financial reporting obligations for swap dealers (SDs) subject to capital requirements of a prudential regulator (Bank SDs) under the CFTC’s SD financial reporting rules. 
Under the relief, in lieu of complying with the CFTC’s financial reporting requirements, and subject to certain specified conditions, Bank SDs may report utilizing certain alternative forms, filing deadlines and/or reporting standards that are otherwise applicable to them by their prudential or home country regulators. CFTC staff determined that providing the conditional relief on a temporary basis would not adversely impact its ability to monitor the capital position of Bank SDs to the extent of its obligation under the Commodity Exchange Act and CFTC regulations.
The no-action letter was issued in response to a joint request received from the Securities Industry and Financial Markets Association and the International Swaps and Derivatives Association on behalf of their SD members who are otherwise required to comply by October 6, 2021 with the CFTC’s newly adopted capital and financial reporting requirements. The relief granted by the letter would expire on the earlier of October 6, 2023 or the adoption by the CFTC of any revised financial reporting and notification requirements applicable to such Bank SDs.

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CFTC Staff Amends Existing Brexit-Related Relief to Provide Market Certainty

Washington, D.C. — The Commodity Futures Trading Commission’s Division of Market Oversight (DMO) announced today that it is amending previously granted temporary no-action relief in connection with the withdrawal of the United Kingdom (UK) from the European Union (EU), known as Brexit. 
Specifically, DMO is amending the DMO portion of CFTC Staff Letter No. 20-39 in order to provide relief to three additional UK multilateral trading facilities (MTFs) and an organised trading facility (OTF) and their market participants. The previously provided relief was meant to provide certainty and maintain the status quo of the EU 5h(g) Exemptive Order upon the expiration of the Brexit transition period while the Commission works on a determination for UK authorized MTFs and OTFs under the Commodity Exchange Act (CEA) Section 5h(g).
The amended relief will expire upon the earlier of (i) the effective date of any exemptive order issued by the Commission pursuant to CEA section 5h(g), for MTFs and OTFs authorized within the UK; or (ii) December 31, 2021.
The amended relief does not alter, amend, supersede, or terminate any of the CFTC’s Market Participant Division no-action positions that are included in the CFTC Staff Letter No. 20-39.
The CFTC has taken a number of other steps to facilitate a smooth transition upon withdrawal of the UK from the EU. For example, in February 2019, the CFTC, the Bank of England and its Prudential Regulation Authority, and the Financial Conduct Authority issued a statement regarding the continuity of derivatives trading and clearing post-Brexit. [See CFTC Press Release No.

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Federal Court Orders Ohio Resident and Multi-Million Dollar Ponzi Scheme Fraudster Permanently Banned from Trading and Registering with the CFTC

Washington, D.C. — The Commodity Futures Trading Commission announced today that Judge Michael R. Barrett, of the U.S. District Court for the Southern District of Ohio entered a Consent Order for Permanent Injunction and Other Equitable Relief against Glen Galemmo finding, among other things, that Galemmo fraudulently solicited individuals to place funds in a commodity pool to trade commodity futures, commodities, stocks and bonds and misappropriated millions of dollars. The order imposes on Galemmo permanent trading and registration bans.
The order resolves a CFTC action against Galemmo filed in the Southern District of Ohio on September 15, 2014. [See CFTC Press Release No. 7001-14]
Case Background
According to the order, and as Galemmo admitted in his plea agreement in a separate, parallel criminal action, from February 18, 2010 through at least July 17, 2013, Galemmo, through his firm, QFC, LLC, made material misrepresentations to commodity pool participants, including falsely illustrating that the pool generated returns of 17 to 40 percent from 2008 through 2012. Galemmo also failed to disclose that he failed to trade pool participants’ funds for a substantial period, and sent investors fraudulent account statements showing false purported trading profits. Through his scheme, Galemmo solicited more than $116 million from pool participants, which he represented would be used for trading futures, commodities and other financial products. In fact, Galemmo only deposited approximately $4.7 million of over $116 million solicited from pool participants into futures accounts that he controlled and sustained total trading losses of approximately $1.2 million. Galemmo also allegedly withdrew or caused to be withdrawn $2.7 million in pool participants’ funds from these futures accounts. Galemmo misappropriated the vast majority of the remaining funds for personal and other business uses.
Parallel Criminal Action
In a separate, parallel criminal action brought by the U.S. Attorney for the Southern District of Ohio, Galemmo previously pleaded guilty to wire fraud and money laundering in connection with the scheme.  [See United States v. Glen Galemmo, Case No. 1:13-cr-00141-HJW, ECF No. 2 (S.D. Ohio Dec. 17, 2013)] On August 28, 2014, Galemmo was sentenced to 188 months in federal prison and ordered to pay $34.5 million in restitution to his victims.
The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any 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.
The CFTC appreciates the cooperation and assistance of the U.S. Attorney’s Office for the Southern District of Ohio in this matter.
CFTC Division of Enforcement staff members responsible for this case are Dmitriy Vilenskiy, Luke B. Marsh and Paul G. Hayeck, and former Division of Enforcement attorneys Eugene Smith and Peter M. Haas.
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Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the Commodity Exchange Act.

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CFTC Orders Idaho Man to Pay $150,000 for Registration Violation and Violations of Commodity Pool Operator Regulations

Washington, D.C. — The Commodity Futures Trading Commission today issued an order filing and simultaneously settling charges against Cody Malosi Wilson of Idaho Falls, Idaho for failing to register as a commodity pool operator (CPO) and failing to comply with CFTC regulations regarding CPOs. The order requires Wilson to pay a $150,000 civil monetary penalty and to cease and desist from any further violations of the Commodity Exchange Act (CEA) or CFTC regulations, as charged.
Case Background
The order finds that from approximately August 2015 to October 2018, Wilson operated commodity pools that he ran under various names, including Young Millionaires, Simple Wealth, and Simple Wallet. In connection with those pools, Wilson solicited and accepted funds from pool participants for the purpose of trading binary options on foreign currency pairs. Wilson used interstate commerce to operate the pools and solicit and accept funds from pool participants, but failed to register as a CPO as required.
The order also finds that Wilson violated CFTC regulations by receiving funds from pool participants via accounts in his name, commingling pool funds with his own property, and failing to operate each commodity pool as a separate legal entity from himself.
The Division of Enforcement staff responsible for this case are Michelle Bougas, Brian A. Hunt, Diana Dietrich, James H. Holl III, Erica Bodin, and Rick Glaser.
CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories, including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud involving individuals and firms, often unregistered, offering investments in commodity pools.
The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

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CFTC’s Energy and Environmental Markets Advisory Committee to Meet September 15

Washington, D.C. — CFTC Commissioner Dan M. Berkovitz, the sponsor of the Energy and Environmental Markets Advisory Committee (EEMAC), today announced that the EEMAC will hold a public meeting on Wednesday, September 15, 2021. The meeting will begin at 9:00 a.m. (EDT) and be held via videoconference in accordance with the agency’s implementation of social distancing due to the COVID-19 (coronavirus) pandemic.
On June 3, 2021, the EEMAC met to discuss how the derivatives markets can facilitate the transition to a low-carbon economy, including the status of carbon reduction through cap-and-trade and other carbon trading market mechanisms. The discussion at the June 3rd meeting included a proposal to form an EEMAC subcommittee to provide a report to the EEMAC on guiding principles for the design of the derivatives and underlying cash markets for environmental products, such as carbon allowances and offsets, that are used to address greenhouse gas emissions. At this meeting, the EEMAC will further discuss this proposal and vote whether to recommend that the Commission approve the formation of a subcommittee.
“Climate change poses significant risks to our financial markets,” said Commissioner Berkovitz. “Derivatives markets can help companies and other market participants manage these risks and move towards a low-carbon economy. I look forward to the EEMAC’s discussion as to how best to advise the Commission on the design of carbon markets.”
Members of the public may watch a live video of the meeting on cftc.gov or listen to a live, audio-only feed using the toll or toll-free numbers provided below. Persons requiring special accommodations to listen to the meeting because of disabilities should notify Abigail Knauff, the EEMAC Secretary, at (202) 418-5123 or at [email protected].

What:

Energy and Environmental Markets Advisory Committee Meeting

Location:

Virtual Meeting 

Date:

September 15, 2021

Time:

9:00 a.m. – 11:00 a.m. EDT

Viewing/Listening Instructions: To access the live audio feed, use the dial-in numbers below. Call-in participants should be prepared to provide their first name, last name, and affiliation, if applicable. Materials presented at the meeting, if any, will be made available on cftc.gov.

Domestic Toll-Free:  

 1-877-951-7311

International Numbers:

International Numbers

Conference Passcode:     

 2056165

Members of the public can submit written statements in connection with the meeting by September 22, 2021. You may submit public comments on cftc.gov. Follow the instructions for submitting comments through the Comments Online process on cftc.gov. If you are unable to submit comments online, contact Abigail Knauff, EEMAC Secretary, via the contact information listed above to discuss alternate means of submitting your comments. Any statements submitted in connection with the committee meeting will be made available to the public, including publication on cftc.gov. Written statements should have “Energy and Environmental Markets Advisory Committee” as the title on any such statement.
The meeting agenda may change to accommodate other EEMAC priorities. For agenda updates and more information about this advisory committee, including its members and associate members, visit EEMAC.
There are five active federal advisory committees overseen by the CFTC. These bodies were created to provide the Commission with outside advice and recommendations on a variety of regulatory and market issues that affect the integrity and competitiveness of U.S. markets. These committees facilitate communication between the Commission and market participants, other regulators, and academics. The views, opinions, and information expressed by the advisory committees are solely those of the respective advisory committee and do not necessarily reflect the views of the Commission, its staff, or the U.S. government.

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Federal Court Orders Georgia Man and Two Companies to Pay Over $15.6 Million for Forex Fraud and Registration Violations

Washington, D.C. —  The Commodity Futures Trading Commission announced today that the U.S. District Court for the Northern District of Georgia entered an order granting the CFTC’s motion for entry of default judgment against defendants Silver Star FX, LLC d/b/a Silver Star Live (SSL), a former New Mexico limited liability company, Silver Star Live Software LLC (SSLS), a Florida limited liability company, and David Wayne Mayer (known by the pseudonym “Quicksilver”) of Roswell, Georgia. The order finds that all three defendants are liable for solicitation fraud in connection with forex transactions, Commodity Trading Advisor (CTA) fraud, as well as multiple CFTC registration violations.
The order requires SSLS and Mayer to pay $3,712,035.93 in restitution jointly and severally and SSL to pay $198,143.03 in restitution. The order further imposes $9,798,107.79 in civil monetary penalties on SSLS; $9,798,107.79 on SSL; and $1,338,000 on Mayer. Additionally, under the order, defendants are permanently enjoined from engaging in conduct that violates the Commodity Exchange Act (CEA), registering with the CFTC, and trading in any CFTC-regulated markets.
The order resolves a CFTC enforcement case filed on June 11, 2020. [See CFTC Press Release No. 8179-20]
Case Background
In the order, U.S. District Judge Robert P. Boulee found that from at least July 2018 to March 2019, the defendants fraudulently solicited customers to open discretionary trading accounts, and offered to trade those accounts, through a fully automated retail foreign currency (forex) trading software system that Mayer created. The order further finds that the defendants solicited customers through online videos, social media, and in-person marketing events. As found in the order, the solicitations contained material misrepresentations and omissions regarding Mayer’s qualifications and trading experience. Additionally, as found in the order, the defendants misrepresented the forex trading system’s performance history and expected trading profits. Further, as found in the order, the defendants failed to disclose that Mayer never opened a live trading account using the forex trading system. The order further found that Mayer failed to register as an associated person of a CTA; and that SSL and SSLS unlawfully permitted Mayer to become or remain associated with them.
Related CFTC Enforcement Action
In a previous, related case, the CFTC found that SSL and SSLS acted as unregistered CTAs, and that two former officers acted as unregistered associated persons of both SSL and SSLS. [See CFTC Press Release No. 8071-19]
The Division of Enforcement staff members responsible for this case are James A. Garcia, Michael Loconte, Erica Bodin, Aimée Latimer-Zayets, and Rick Glaser.
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CFTC’s Foreign Currency (Forex) Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency (Forex) Trading Fraud Advisory, to help customers identify this sort of scam.
The CFTC also strongly urges the public to verify a company’s registration with the Commission before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online or contact the CFTC Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

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Federal Court Orders Alabama Man to Pay More Than $16 Million in Precious Metals Fraud

Washington, D.C. — The Commodity Futures Trading Commission announced today that the U.S. District Court for the Southern District of Texas entered a consent order against Charles McAllister of Alabama. The order requires McAllister to pay $16,186,212.56 in restitution and permanently enjoins McAllister from engaging in conduct that violates the Commodity Exchange Act (CEA), from registering with the CFTC, and from trading in any CFTC-regulated markets. 
Case Background

The order stems from a complaint the CFTC filed against McAllister on April 26, 2018. [See CFTC Press Release No. 7720-18]. The order finds that from August 15, 2011 through July 20, 2015, McAllister and his defunct and bankrupt company BullionDirect, Inc. (BDI) defrauded thousands of customers throughout the U.S. who purchased precious metals from or through BDI through various misrepresentations and omissions.
According to the order, BDI customers sent money to McAllister and BDI for the purported purchase of gold, silver, palladium, and platinum that was to either be immediately delivered or stored on the customers’ behalf. Contrary to their promises, McAllister and BDI did not purchase or store metal for customers, but instead misappropriated the customer funds to pay back other customers, cover BDI business expenses, and invest in other businesses. The order also finds that McAllister and BDI issued false account statements to these customers, showing balances of precious metals and cash that were not in McAllister’s or BDI’s possession.
Criminal Conviction
In a separate, parallel criminal action, on October 4, 2019, after a trial, a jury found McAllister guilty of two counts of wire fraud and one count of engaging in monetary transactions in criminally-derived property. [United States v. McAllister, No. 1:18-CR-00016LY-(1) (W.D. Tex.)] The court ordered McAllister to pay $16,186,212.56 in restitution to his victims (consistent with its order in the CFTC action) and to serve 10 years in federal prison. 
The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoer may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure wrongdoers are held accountable. 
The CFTC appreciates the cooperation and assistance of the U.S. Attorney’s Office for the Western District of Texas, the Federal Bureau of Investigation, and the Internal Revenue Service, all located in Austin, Texas.
CFTC Division of Enforcement staff members responsible for this case are Stephen Turley, J. Alison Auxter, Christopher Reed, and Charles Marvine, as well as former staff member Jo Mettenburg.
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CFTC’s Precious Metals Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Precious Metals Fraud Advisory, which alerts customers to precious metals fraud and lists simple ways to spot precious metals scams.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the CFTC Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

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CFTC Charges Unregistered Michigan Forex Firm and its Owner with Fraud and Misappropriation

Washington, D.C. — The Commodity Futures Trading Commission has filed a civil enforcement action in the Eastern District of Michigan against Ali Bazzi and his company Welther Oaks, LLC, both of Michigan, charging them with fraud and misappropriation in connection with their operation of a foreign currency (forex) commodity pool. 
In its continuing litigation, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA), and CFTC regulations, as charged.
Case Background
According to the complaint, starting in at least March 2018, Bazzi, the owner of Welther Oaks, fraudulently solicited at least $470,000 from at least 25 pool participants for a commodity pool that would purportedly trade forex. As alleged, in order to entice pool participants, Bazzi and Welther Oaks falsely represented that they had made large profits trading forex; and that pool participants would realize guaranteed profits as high as 15% per month on their funds without losses, and could withdraw their funds at any time. The complaint further alleges that Bazzi and Welther Oaks used only a small fraction of the funds they collected to trade forex and concealed their fraud by issuing false account statements to the pool participants that purported to show trading profits. In addition, the complaint alleges that defendants misappropriated at least $387,000 of participants’ funds to spend on automobiles, jewelry, retail purchases, meals and entertainment and travel for Bazzi.
Parallel Criminal Action
In a separate, parallel criminal action against Bazzi in the U.S. District Court for the Eastern District of Michigan (U.S. v. Bazzi, 2:21-cr-20348-DML-DRG), Bazzi entered a guilty plea on August 17, 2021.
The CFTC cautions that orders requiring payment of funds to victims may not result in the recovery of any money lost because 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.
The CFTC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of Michigan and the FBI’s Detroit Field Office in this matter.
The Division of Enforcement staff members responsible for this case are Joseph J. Patrick, Jon J. Kramer, David A. Terrell, Scott R. Williamson, and Robert T. Howell.
CFTC’s Foreign Currency (Forex) Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency (Forex) Trading Fraud Advisory, to help customers identify these scams.
The CFTC also strongly urges the public to verify a company’s registration with the Commission before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

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CFTC Charges Nebraska Commodity Pool Operator and its Owner with Fraud and Regulatory Violations

Washington, D.C. — The Commodity Futures Trading Commission today announced that it has filed a civil enforcement action in the U.S. District Court for the District of Nebraska against commodity pool operator (CPO) Centurion Capital Management, Inc. (Centurion), and its owner, Terry M. Svejda (Svejda) of Blair, Nebraska. The complaint alleges that Centurion and Svejda engaged in commodity pool fraud in connection with commodity futures trading, in that he fraudulently misappropriated participant funds and made false or misleading statements about how their funds would be invested in the commodity pool.
In litigation, the CFTC seeks restitution, disgorgement, civil monetary penalties, trading and registration bans and injunctions against further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.
Case Background
The complaint alleges that beginning in at least 2012, and continuing through the present, Centurion and Svejda solicited approximately $790,000 from approximately 27 persons to invest in a commodity pool that would use pool funds to invest in exchange-traded commodity futures contracts. However, the defendants failed to invest participant funds, and misappropriated more than 80 percent of the pool’s assets. 
The complaint also charges Centurion and Svejda for multiple regulatory violations. Centurion is charged with failing to register with the CFTC as a CPO, commingling pool participant funds, and failing to provide required disclosure documents. Svejda is charged with failing to register as an associated person of Centurion. 
The complaint also charges Svejda with liability for all of Centurion’s misappropriations and misrepresentations as a controlling person who knowingly induced the violations or did not act in good faith. Additionally, Centurion is charged with liability for Svejda’s violations of the CEA and CFTC regulations, as such violations occurred within the scope of his employment, office, or agency with Centurion.
The CFTC acknowledges and appreciates the cooperation and assistance of the National Futures Association.
The Division of Enforcement staff members responsible for this action are Glenn Chernigoff, Michael Loconte, Aimée Latimer-Zayets, Erica Bodin and Rick Glaser.
CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories, including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud involving individuals and firms, often unregistered, offering investments in commodity pools.
The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

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CFTC Orders Tyson Foods to Pay $1.5 Million for Position Limit, Reporting, and Recordkeeping Violations

Washington, D.C. — The Commodity Futures Trading Commission today filed and settled charges against Tyson Foods, Inc., for exceeding the CFTC’s position limits for soybean meal futures contracts traded on the Chicago Board of Trade (CBOT) and for failing to comply with reporting and recordkeeping obligations regarding its cash positions in grains. The order requires Tyson to pay a $1.5 million civil monetary penalty and to cease and desist from violating the Commodity Exchange Act and CFTC regulations as charged.
Case Background
The order finds that on more than 590 dates over a five-year period between January 2016 and January 2021, Tyson held positions in CBOT soybean meal futures in excess of then-applicable federal position limits. Tyson did so without the benefit of a hedge exemption for soybean meal. On those dates, Tyson’s positions were, on average, 2,473 contracts—or 38%—over the then-applicable 6,500-contract limit, and its net long futures positions exceeded the limit by as much as 7,057 contracts.
The order also finds that, in all but two months from at least January 2016 through August 2020, Tyson filed with the CFTC incorrect Form 204 (Statements of Cash Positions in Grain) that reported non-existent fixed-price cash sales of soybean meal, overstated fixed-price cash sales of corn, and failed to report purchases and sales from Tyson’s grain elevators. 

The order also finds that Tyson failed to maintain certain records of cash transactions relating to futures positions in excess of position limits, in violations of then-applicable recordkeeping requirements.
The order recognizes Tyson’s substantial cooperation with the investigation, including its self-reporting of additional violations after commencement of the investigation, and acknowledges Tyson’s representations concerning its remediation in connection with this matter. As stated in the order, the CFTC recognizes Tyson’s substantial cooperation and remediation in the form of a reduced civil monetary penalty.
The Division of Enforcement Staff responsible for this case are Ashley J. Burden, Joseph Konizeski, Kelly Beck, Janet Briner, Scott Williamson and Robert Howell.

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