CFTC Sues Iowa Money Manager for Fraud

At least 12 participants gave him a total of ‎‎$400,000 to trade in their ‎personal commodity futures accounts.

The U.S. Commodity Futures Trading Commission has filed an enforcement ‎action in New York federal court against an Iowa-based money manager ‎accused of soliciting clients for his fraudulent scheme via Craigslist ads, the ‎agency said Monday.‎

Discover credible partners and premium clients at China’s leading finance event!

Join the iFX EXPO Asia and discover your gateway to the Asian Markets

According to the complaint, Lon Olen Friedrichsen solicited the ‎money from several unsuspecting investors by guaranteeing participants a ‎monthly return on their investments based on profits purportedly earned ‎from commodity trading. The commission is seeking a court order to force ‎Friedrichsen to disgorge ill-gotten gains and pay a fine.‎

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 as claimed 10% per day returns provided that they would ‎split the profits 50/50 every week.

The CFTC alleges 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.‎

Suggested articles

Why Ethereum Needs Layer 2 Solutions More Than EverGo to article >>

To create the illusion of stability, he allegedly prepared and distributed false ‎account statements to fund participants, telling investors that his strategy ‎offered a safe investment with steady and guaranteed returns, according to ‎the complaint.‎

As a result, at least 12 participants gave Friedrichsen a total of ‎‎$400,000 to trade in their personal commodity futures accounts held at ‎Futures Commission Merchants. He lost $161,000 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 CFTC has asked the court to provide full restitution to defrauded ‎investors, disgorgement of ill-gotten gains and to pay the appropriate civil ‎monetary penalties. In addition to fiscal claims, the agency seeks permanent ‎registration and trading bans and a permanent injunction from future ‎violations of federal commodities laws.‎

Got a news tip? Let Us Know