In separate statements, the CFTC announced that it had received two court orders against alleged forex frauds. In the first, the CTFC announced that it had received a federal court order against Christopher Varlesi of Chicago, Illinois, and his business name, Gold Coast Futures and Forex, to pay restitution of more than $638,000 to defrauded investors and a $700,000 civil monetary penalty. The order is part of a March 2012 complaint that was filed against Varlesi for “operating a commodity pool to trade commodity futures and off-exchange foreign currency (forex), making false statements to pool participants, misappropriating pool funds, and failing to register with the CFTC as a Commodity Pool Operator”. According to the court order, Varlesi has accepted at least $1.7 million from at least 20 individuals to trade forex and futures. He then issued notes and offered fixed monthly payments. The CFTC charged that Varlesi used no more than $220,000 to trade, with the rest being misappropriated by him for his personal expenditures and to repay investors as part of his Ponzi scheme.
The CFTC also secured a federal court order against Alpha Trade Group S.A. and its Employees and Agents to Pay Combined Restitution and Penalties of $5.779 Million for Defrauding Pool Participants. According to the order, Alpha Trade solicited customers, accepted their funds into the two pools and then failed to return more than $1,461,000, primarily from residents in Florida, California, and Puerto Rico. The order also found the defendants to have misappropriated customer funds. Named in the case along with Alpha Trade were Jose Cecilio Martinez Beltran, Welinton Bautista Castillo, Yehodiz Padua Valentin, Maria Alvarez Gutierrez, and Maria Asela Rodriguez, all of Orlando, Florida.
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The events highlight the extensiveness of fraud taking place under the name of managed forex trading and the widespread use of fraudulent account performance being used to solicit clients (more on forex Ponzi schemes).