The Commodity Futures Trading Commission (CFTC) announced on Thursday that the US District Court of Nevada has ordered Mirko Schacke, who owned commodity futures software vendor TradeMasters USA LLC, to pay a fine of $168,626 to defrauded customers and a $505,878 civil monetary penalty.
US District Judge, Gloria M. Navarro, found the defendant, Schacke, and his company TradeMasters, had committed fraud when recruiting customers for its futures trading software, had failed to register with the CFTC and did not provide the required disclosures to its investors.
The court also imposed permanent trading and registrations bans against Schacke and TradeMasters. According to the statement, this will prohibit them from committing further violations of the Commodity Exchange Act and CFTC Regulations, as charged.
The court order, which was entered on June 22, 2018, amends a previous order entered on September 13, 2017. The matter was sent to the courts after the CFTC filed an anti-fraud action against Schacke and TradeMasters on August 15, 2016.
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Specifically, the court order found that Schacke and TradeMasters:
- Lied to its customers and accepted $168,626 from 39 customers who purchased TradeMaster’s automated futures trading software. The company charged between $1,500 to $20,000 for the software
- Through its website and other means made false statements regarding the trading performance of TradeMasters and its software, such as a 300% return was earned in just three months by a “real customer”
- Said users of the software generate a monthly income of $5,000 to $10,000, when in fact the software did not work, and users actually lost money
- Stated that TraderMasters’ “coaches” had more than 20 years of trading experience, when in fact Schacke was the only coach, and he had no prior experience
- Hypothetical trading results were presented as actual trading profits;
- Video testimonials from “real customer[s]” were actually from paid actors
According to the court order, Schacke personally executed trades for three customers despite himself and the company not being authorized to do so. The company also failed to provide the required disclosures regarding client testimonials on its website.
In the statement, the CFTC cautions that victims may not be repaid the money they lost in full, even when a court orders rule to do so, as the wrongdoers may not have sufficient funds or assets.
It reminds consumers that it will continue to fight to ensure wrongdoers are held accountable for their actions, and customers are protected.