The US Commodity Futures Trading Commission (CFTC) today announced that it has filed charges against a New York-based forex scheme operator for fraudulently soliciting nearly
$1.5 million from investors to trade in foreign currency.
According to the complaint filed yesterday, Daniel Winston LaMarco and his company GDLogix Inc. fraudulently solicited the money from investors by guaranteeing pool participants a monthly return on their investment based on profits purportedly earned from trading off-exchange margined retail derivatives forex contracts.
As a result, at least 13 pool participants gave the defendants a total of $1,492,650 to trade in their purported forex pool.
Defendants falsely told their customers, among other things, that they offer a safe investment with steady and guaranteed returns. “LaMarco solicited pool participants by falsely representing to them the purported success of his personal investments in forex trading and the purported safety of his forex investment strategy,” the agency said.
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Many of the victims, which included friends and acquaintances of LaMarco, sought higher monthly income on their savings, the CFTC said. But the agency alleges that the pool never generated any income from trading forex, as in reality LaMarco lost nearly all of the pool participants’ funds.
In order to shore up the fraud, LaMarco allegedly provided fabricated account statements which claimed to pool participants that GDLogix generated strong investment returns and that the value of his commodity pool increased to $1,797,126.
During that time, the defendants solicited pool participants by word of mouth, emails, and websites, among other means, the complaint says.
The CFTC has asked the court to provide full restitution to defrauded pool participants, disgorgement of ill-gotten gains and the payment of appropriate civil monetary penalties. In addition to fiscal penalties, it also asked for the imposition of permanent registration, trading bans and a permanent injunction from future violations of federal commodities laws.
James McDonald, Director of the CFTC’s Division of Enforcement, commented: “This case is another example of a fraudulent investment scheme based on personal relationships. LaMarco targeted those with whom he made connections through his local community. Through our cooperative enforcement efforts, we can combine our available remedies with those of our law enforcement partners to achieve maximum deterrence and protection for customers and the markets. In appropriate cases like this one, the U.S. Department of Justice can seek a term of imprisonment, while we seek to ensure wrongdoers never return to the markets we regulate.”