The CFTC has announced that it is suing Michael Alcocer and his firm InovaTrade for fraud. According to the CFTC, InovaTrade falsely marketed itself as a registed Retail Foreign Exchange Dealer (RFED). We wrote about the firm in 2011 that it looked like it was a scam. At the time, customers had complained that the firm was holding back funds from clients. Also, the CFTC had sued them previously in 2011 for failing to file as a RFED.
According to the CFTC, InovaTrade had solicited over $10.6 million from more than 400 global customers. InovaTrade was allegedly trading on behalf of customers, but was in fact sending false account documents. InovaTrade had operated out of Panama, a country that has been the center of many sketchy forex brokers, but has since seen less firms attributing their offices there. The CFTC added that they had worked together with the Panama Superintendencia del Mercado de Valores (SMV) for the case.
CFTC Sues Michael Alcocer and His Company, InovaTrade, Inc., for Foreign Currency Fraud and Misappropriation
Defendants allegedly solicited over $10.6 million from more than 400 customers worldwide
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Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a lawsuit in the U.S. District Court for the Southern District of Florida against Michael Alcocer and his company InovaTrade, Inc. (InovaTrade). The CFTC complaint alleges that Alcocer and InovaTrade orchestrated a fraudulent scheme that, between November 2008 and September 2011, induced more than 400 customers to deposit more than $10.6 million with InovaTrade, a purported Retail Foreign Exchange Dealer (RFED), to trade off-exchange foreign currency (forex). The CFTC’s complaint was filed on September 21, 2012, and the CFTC recently served its lawsuit upon defendants in Panama.
The CFTC Complaint alleges that InovaTrade, using its website as well as certain third-party introducing brokers, fraudulently solicited customers, both within and outside the United States, to open retail forex trading accounts — some managed by InovaTrade. The Complaint further alleges that defendants sent InovaTrade customers false trading activity statements and misappropriated all customer funds held as of September 2011 — likely more than $9.8 million.
Previously, in January 2011, the CFTC sued InovaTrade in the U.S. District Court for the Western District of Missouri for failing to register with the CFTC as an RFED (see CFTC Press Release 5974-11, January 26, 2011). In July 2011, the same court entered an Order of Permanent Injunction prohibiting InovaTrade from continuing to operate as an RFED with U.S. customers. The CFTC’s current Complaint alleges that beginning in or around August 2011, InovaTrade refused to honor any customer withdrawal requests, and in October 2011, defendants closed InovaTrade’s operations and misappropriated all remaining customer funds.
In its continuing litigation, the CFTC seeks civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains, trading and registration bans, and a permanent injunction against further violations of the federal commodities laws, as charged.
The CFTC appreciates the assistance of the Panama Superintendencia del Mercado de Valores (SMV).
CFTC Division of Enforcement staff responsible for this case are Margaret Aisenbrey, Jenny Chapin, Stephen Turley, Mary Lutz, Charles Marvine, Rick Glaser, and Richard Wagner.