A New York court has granted the US Commodity Futures Trading Commission’s motion for a default judgment against a commodity trading firm run by an Iowa-based money manager accused of soliciting clients for his fraudulent scheme via Craigslist ads.
The agency today said Lon Olen Friedrichsen had been ordered to pay nearly $1.5 million in penalties and additional $600,000 in restitution for illegal, off-exchange Oil futures transactions and registration violations.
The orders also imposed lifetime trading, solicitation and registration bans against Friedrichsen and “permanently enjoins him from future violations of the Commodity Exchange Act and CFTC Regulations,” the CFTC said.
Clients gave Friedrichsen the power to trade in their accounts as he fraudulently induced them claiming to be fit and proper. One client gave him $100,000 as he claimed to yield 10 percent per day in returns provided that they would split the profits 50/50 every week.
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The CFTC said that, beginning in December 2014 and continuing through to May 2017, the defendant conspired to defraud investors by enticing them to participate in his asset management services.
As a result, at least 41 participants gave Friedrichsen a total of $591,570 to trade in their personal commodity futures accounts held at Futures Commission Merchants. He lost most of his clients’ funds and raked in a total of $45,369 in fees.
In connection with the promotion of his service, the unregulated money manager made a series of materially false claims through various means, including a website, social media, newsletters , and verbal communications. He also allegedly utilized promotional materials that showed trading returns based on hypothetical results, without including the required disclosure language.
The order also finds that the company accepted clients’ trades and funds and therefore acted as Eligible Contract Participants (ECPs), without registering as such with the CFTC.