A New Jersey couple who purportedly owned a hedge fund was hit with criminal charges for allegedly collecting money from several investors and spending it on a lavish lifestyle.
The U.S. Commodity Futures Trading Commission (CFTC) today filed a lawsuit against Alcibiades Cifuentes and Jennifer Wee Cifuentes, charging them with operating a fraudulent scheme that offered forex and commodity futures transactions.
Specifically, the U.S. derivatives regulator alleged in its complaint that from April 2013 through March 2015, Cifuentes and Wee engaged in a fraudulent scheme that netted nearly $600,000 from victims. While they were actually running a Ponzi scheme, Cifuentes and Wee claimed that these funds would participate in a commodity pool for trading in a portfolio of financial instruments including forex, commodities and other investments.
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In connection with the promotion of their pool, the defendants, using a demonstration account, made a series of materially false claims to lure investors interested in forex trading. The claim was made that pool participants could get extraordinary investment returns.
Instead of using the investors’ monies in trading, the fraudsters allegedly misappropriated all of the pool participants’ funds, which was largely spent on personal expenses such as luxury vehicles, jewelry and clothing among other items. As also alleged, they used some new investors’ funds to pay back other investors in a Ponzi-like fashion, so that they would invest or refer additional money, thereby allowing the scheme to continue for a longer period of time.
As a result of the actions the commission seeks full restitution to defrauded participants, disgorgement of any ill-gotten gains and a civil monetary penalty. In addition to the fiscal penalties the CFTC seeks “permanent registration and trading bans, and a permanent injunction against future violations of federal commodities laws,” as charged.
Meanwhile, the couple is also accused of mail and commodities fraud in a related criminal action brought by the U.S. Attorney’s Office for the District of New Jersey. The mail fraud charge that both defendants face carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice. Further, the commodities fraud charge could net each a decade in prison and a fine of $1 million.