Two California-based companies and its principal Irena Feldman will pay a more than $600,000 penalty to settle claims of defrauding investors through operating an unregistered commodity pool that offered forex and commodity futures transactions, according to a regulatory announcement from the U.S. Commodity Futures Trading Commission (CFTC).
The CFTC says Beverly Hills resident Irena Feldman and her companies Cindium Inc. and Einstein Exchange Group Inc., both located in Century City, California, fraudulently solicited approximately $401,000 from at least 30 victims. While she was actually running a Ponzi scheme, Feldman claimed that these funds would participate in a commodity pool for trading in a portfolio of financial instruments including forex, futures, options, commodities, and for other investments.
Instead of using the investors’ monies in trading, Feldman allegedly misappropriated all of the pool participants’ funds, which was largely spent on personal expenses such as travel, meals, car payments, payment of traffic violations, and purchases at luxury retailers. As also alleged, she 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.
Why Your Enterprise’s Finances Rely on Employee TrainingGo to article >>
In addition, Einstein and Cindium were charged with acting as a CPO and CTA without registering as such with the U.S. watchdog as required.
In connection with the promotion of her pool, Feldman, using an internet website, made a series of materially false claims to lure investors interested in forex trading. The claim was made that pool participants could get monthly returns on investments of 2% to 5%, although the website guaranteed returns of between 2% to 10%. In addition, she claimed that her investors’ capital would be fully guaranteed against losses by particular loan agreements.
The U.S. derivatives regulator’s order requires Feldman, Cindium, and Einstein to jointly and severally to pay restitution of $401,000 and a $200,000 civil monetary penalty. In addition to the fiscal penalties, the order imposes permanent trading, solicitation and registration bans against the respondents. Furthermore, it permanently bars them from engaging in any commodity-related activities and requires them to cease and desist from violating the provisions of the CEA, as charged.
Finally, the CFTC warned victims in its statement that they may not recover their lost money because the wrongdoers may not have sufficient funds or assets.