This Friday another FX scam was revealed by the US Commodity Futures Trading Commission (CFTC). The regulator has filed and settled enforcement actions against Texas man, who was marketing passive returns through their bogus foreign currency trading venture.
The US derivatives regulator hit Joshua Christian McDonald and his company, Perfection PR Firm LLC (PPR), with penalties totaling $1.3 million. McDonald held himself out to the public as an experienced FX trader and the operator of multiple investment funds. Nearly 12 investors placed at least $440,000 with PPR, and most or all of their money was lost, the complaint said.
The settlement involves charges that that beginning in at least August 2017, the defendants fraudulently solicited retail investors to open forex trading accounts by misrepresenting their experience and profitability, among other things. McDonald and his company falsely said they would be able to produce 10% to 50% monthly returns.
“In fact, McDonald did not trade forex as successfully as he claimed and actually lost money. Moreover, the defendants misappropriated customers’ funds by transferring funds into cryptocurrency accounts in McDonald’s name, paying McDonald’s personal expenses, and failing to return funds upon customers’ requests. Customers lost most or all of their funds as a result of the defendants’ fraud and misappropriation,” the agency said.
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While leading the fraudulent scheme McDonald had made several violations including the fraudulent solicitations, false statements, and fraudulent misappropriation. The offender has created numerous fake account statements. With the help of them, he was misleading investors about the status of their investments. The commission also alleges McDonald spent his ill-gotten gains on personal expenses.
In a related criminal case, the 24-year-old McDonald was indicted by a federal court in St. Louis in January on four counts of wire fraud after he bilked four Missouri residents out of $260,000.
The penalties are the latest to be handed out in a long-running crackdown on online trading providers targeting retail investors, which has seen many brokers and their principals pay millions in fines.
The CFTC said the recent action should set a precedent for additional enterprises that fail to comply with the commission’s requirements. The case highlights regulators’ concerns about the risks posed by managed trading schemes, which the watchdog says it has seen an increase in websites that fraudulently promote such products and its related advisory services.