A New Jersey federal court has ordered two defunct forex firms and their operators to pay over $2.7 million for operating a fraudulent Ponzi scheme that swindled more than $700,000 from investors.
According to the court papers, Thomas Lanzana and his company Blackbox Pulse (Unique Forex), as well as Nikolay Masanko and his company White Cloud Mountain, fraudulently solicited the money from several investors to participate in their forex trading pools and other investments. They have been ordered to pay $762,807.24 in restitution to customers and $1.95 million in civil monetary penalties, respectively.
The order is the continuation of the initial anti-fraud enforcement action filed by the US Commodity Futures Trading Commission (CFTC) against the fraud operators in September 2017.
To create the illusion of stability, the defendants distributed false account statements to pool participants, telling them that Lanzana was a successful forex trader. All the while, Lanzana concealed $12,000 in trading losses from investors and published false statements showing balances of $800,000 for a forex trading account that did not exist.
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As a result, at least 31 victims gave them a total of $700,000 to trade in their purported forex pool, the agency said.
Funds went to golf expenses, among others
Created in February 2013 and dissolved in February 2017, the investment pools didn’t generate any income while Lanzana misappropriated $350,000. Additionally, in order to shore up the fraud, he used a Ponzi scheme style in which he issued payments to investors that he claimed represented profits but were, in fact, other investors’ funds.
According to the complaint, Lanzana also spent a portion of forex pool’s assets to pay for his personal expenses, including purchases on Amazon.com, payments to a luxury car dealer and a jewelry retailer, and golf expenses, among others.
Immediately after the complaint was filed by the CFTC in 2017, a New Jersey court issued an emergency order freezing preserving assets under the defendants’ control and prohibiting them from “destruction or concealment of their books and records.”
The CFTC has asked the court to provide full restitution to defrauded pool participants, disgorgement of ill-gotten gains and to pay the appropriate civil monetary penalties. In addition to fiscal claims, the agency imposed permanent registration and trading bans and a permanent injunction from future violations of federal commodities laws.