A New Zealand registered forex broker that has long had its website suspended after having its license revoked by the local authorities has become a target of a particularly powerful regulator. In what is another case of the massive loopholes in New Zealand legislation being demonstrated, this company, that has been closed since May 2014, is facing tough legislative action in the U.S.
The U.S. Commodities and Futures Trading Commission (CFTC) has charged IB Capital FX LLC alongside its agents Michel Geurkink and Emad Echadi with soliciting at least $50 million from investors.
an average of just over $50,000 per depositor was lost
The civil enforcement filed by the regulator also charges the defendants as individuals. According to the information detailed in the complaint that was filed by the regulator, at least 960 clients worldwide, at least 697 of which have been U.S. residents, have deposited funds with the brokerage. That totals to an average of just over $50,000 per depositor.
“Investments” were made in 2012
The wrongdoings occurred between January 1st, 2012 through to September 18th, 2012, according to the U.S. regulator. Clients of the company were assured that their funds can be used to trade foreign exchange contracts over the counter, however IB Capital FX LLC was never authorized by the CFTC to take their deposits.
Mr Echadi has been listed as director of the company in the company’s New Zealand office from December 2011 until its closure in May 2014 with a residential address in the Netherlands.
The scheme that the CFTC is exposing here has been connected to another case of foreign exchange investment fraud that also stirred a lot of controversy in Australia. Back in 2012, the Australian Securities and Investments Commission (ASIC) claimed that Australian national Senen Pousa had been providing financial services illegally through his company Investment Intelligence Corporation.
The CFTC initially charged Investment Intelligence Corporation and Senen Pousa
Mr Pousa founded a financial advice program dubbed ProphetMax that used the New Zealand based broker IB Capital FX LLC. The CFTC initially charged Investment Intelligence Corporation (IIC) and Senen Pousa, yet almost 3 years later it has apparently also confirmed the involvement of the brokerage in the scheme.
Amid Ongoing Uncertainty, Is the Crypto Industry Stepping Up? Go to article >>
The defendants were later convicted and were required to pay up to $192 million in fines and restitution.
Back in 2012, IB Capital claimed on its inactive website that it was relocating to Europe, however the website never reopened for business despite offering a working page that accepted applications for withdrawals.
The New Zealand incorporated brokerage was telling clients to deposit their funds into an ING bank account in the Netherlands.
The same people have also been directors of a string of similarly named and similarly behaved companies in both New Zealand and the UK.
The U.S. regulator has worked on the case in conjunction with regulators in Australia, the United Kingdom, Hungary and New Zealand. The investigation has also been helped by several other U.S. authorities including the Securities and Exchange Commission (SEC), the Department of Justice (DoJ), the Federal Bureau of Investigation FBI and others.