The US Commodity Futures Trading Commission (CFTC) today reported that it has obtained a federal court judgement against a Cayman Islands corporation and its principle requiring them jointly to pay restitution of more than $4.4 million to defrauded US customers.
The court order, entered by Judge Loretta Biggs of the US District Court for the Middle District of North Carolina, finds that Tracy Lee Thomas and his Cayman Islands-based Marbury Advisors Inc. solicited and obtained a sum in excess of $1.1 million from American customers to trade in treasury bills on their behalf.
The order states that Tracy and Marbury defrauded their customers, in part by misrepresenting their historical trading results. It also alleges that the defendants misrepresented to customers that they would invest their funds in relatively safe US government debt securities, while instead using the money to trade risky assets.
Specifically, the order finds, as was alleged in the CFTC’s complaint filed on March 22, 2016, that during the period from February 2011 and August 2012, Tracy and Marbury reported overall trading profits when in fact they lost most of the pooled monies.
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The invented transactions were key to perpetuating the fraud and ensnaring new customers, according to the complaint.
According to the CFTC’s statement: “Defendants also failed to disclose 1) the substantial risk of loss associated with futures trading, and 2) the net losses Defendants sustained while trading futures.”
The order requires Thomas and Marbury to pay restitution of $1,110,413 and a civil monetary penalty of $3,331,239, which represents triple the gains they made.
The court also imposed permanent trading and registration bans against Tracy and Marbury and prohibits them from violating the anti-fraud provisions of the Commodity Exchange Act, as charged.
Thomas also stands accused of providing his father-in-law with fabricated account statements that documented fictitious trades and profits from what he called investing in “safe” and “conservative” T-Bills, raking in a total of $594,000.