The U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement action charging Senen Pousa of Australia, Joel Friant of Bellingham, Wash., and their company, Investment Intelligence Corporation (IIC), an Australian corporation, with operating a fraudulent off-exchange foreign currency (forex) scheme. The complaint also charges Michael Dillard and Elevation Group, Inc., both of Austin, Texas, with registration violations. The scheme allegedly accepted at least $53 million from at least 960 clients worldwide, including at least 697 clients in the United States, and clients in Australia, the United Kingdom, Canada, Germany, the Netherlands, and Singapore, among other countries. None of the defendants has ever been registered with the CFTC.
On the same day the CFTC complaint was filed, September 18, 2012, Judge Lee Yeakel of the U.S. District Court for the Western District of Texas issued an emergency order freezing the assets of defendants Pousa, Friant, and IIC and prohibiting the destruction of books and records.
The CFTC complaint alleges that from at least January 1, 2012 through the present IIC, through Pousa, Friant and its other agents, and defendants Dillard and Elevation Group, utilized “wealth creation” webcasts, webinars, podcasts, emails, and other online seminars via the Internet to directly and indirectly solicit actual and prospective clients worldwide to open forex trading accounts at IIC. The complaint further alleges that clients were promised by IIC, through Pousa, Friant, and other agents 1) a monthly return of 9 percent, 2) that IIC’s managed forex trading would risk less than 3 percent of a client’s capital per transaction, 3) that IIC was able to limit the risk inherent to forex trading by limiting its managed forex trading to 2 to 5 trades per month, and 4) that IIC has six “proprietary traders” working 24 hours a day trading clients’ funds. The CFTC complaint alleges that all of these representations to clients were false.
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On or about May 16-17, 2012, the complaint alleges that clients suffered a loss of over 60 percent of their investment, when IIC, by and through its agents, entered over 200 forex trades in each client’s account in violation of the representations made by IIC, by and through its agents.
The CFTC complaint seeks restitution, rescission, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the anti-fraud provisions of federal commodities laws, as charged.
Further, on September 18, 2012, the court entered a consent order of permanent injunction and ancillary equitable relief against defendants Michael Dillard and Elevation Group, Inc. According to the consent order, the court found that Elevation Group acted as an Introducing Broker and solicited orders from non-ECPs in connection with leveraged forex transactions without registering with the CFTC. The court further found that Dillard acted as an unregistered Associated Person of the Elevation Group, according to the order.