The U.S. Commodity Futures Trading Commission (CFTC) announced that it obtained a federal court order requiring defendants Robert A. Christy of Milton, Ga., and his company, Crabapple Capital Group LLC (Crabapple) of Alpharetta, Ga., to pay over $2.6 million in monetary sanctions for foreign currency (forex) fraud.
Specifically, the order requires the defendants to pay a $1,541,882 civil monetary penalty and $1,099,598 in restitution to settle CFTC charges that they operated a forex commodity pool fraud, misappropriated customer funds, and made false statements to the National Futures Association (NFA). The order also imposes permanent trading and registration bans against the defendants and permanently prohibits them from violating the Commodity Exchange Act and CFTC regulations, as charged.
The order, filed on October 16, 2012, by Judge Richard W. Story of the U.S. District Court for the Northern District of Georgia, stems from a CFTC anti-fraud enforcement action filed against Christy and Crabapple on April 19, 2012,
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The order finds that, from at least October 2008 through April 2012, the defendants defrauded 22 individuals who contributed $1,416,000 to an investment pool operated by Crabapple to trade forex. In the course of soliciting investors, according to the order, the defendants’ statements to pool participants regarding the defendants’ forex trading performance were completely false. Christy misrepresented Crabapple’s trading performance history and experience and advertised regular monthly trading profits when, in fact, Crabapple had experienced consistent and significant losses, the order finds.
The order also finds that the defendants misappropriated most of the pool participants’ money. Christy treated Crabapple’s checking account as his personal piggy bank, using the money in the account for a variety of personal, business, and marketing expenses, even though the defendants told pool participants that their contributions would be used to trade forex, according to the order.
The defendants concealed their fraud by preparing and distributing false monthly account statements to pool participants and by making false statements and submitting false accounting records to the NFA in the course of an NFA examination, the order finds.