US court dishes out heavy $4.6 million fine

The U.S. Commodity Futures Trading Commission (CFTC) today announced that a federal court in New York ordered more than $4.6 million in restitution and a civil monetary penalty in a 2003 CFTC enforcement action against defendants Thomas Qualls and his company, International Foreign Currency, Inc. (IFC), which charged the defendants with misappropriation, fraudulent solicitation, and unlawfully offering off-Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term foreign currency (Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term) futures contracts.
Judge Dora L. Irizarry, of the U.S. District Court for the Eastern District of New York, entered an order granting the CFTC summary judgment, finding that the defendants had committed fraud as alleged in the CFTC’s complaint, and requiring the defendants to pay $814,733 in restitution and a $3.84 million civil monetary penalty for operating an illegal off-exchange forex futures fraud from November 2001 to July 2003.
The court’s order stems from a CFTC complaint filed on July 23, 2003, that charged Qualls, IFC, and Michael Kourmolis with fraudulently soliciting customers to trade illegal off-exchange forex futures contracts and Qualls and IFC with misappropriation of customers’ funds. Subsequently, on November 10, 2009, the court entered a consent order of permanent injunction against defendant Kourmolis.
On November 5, 2008, in a related criminal action, Qualls was found guilty by a federal jury on 16 counts, including mail and wire fraud, conspiracy to commit mail and wire fraud, and obstruction of justice. The obstruction of justice charges related in part to acts of obstruction in connection with the CFTC’s investigation and litigation. On November 6, 2008, the jury also returned a verdict on related forfeiture charges, finding that Qualls received proceeds in the amount of $922,382.
The court’s order against Qualls and IFC in the CFTC’s 2003 action held that the defendants could not re-litigate the underlying facts of Qualls’ criminal wire and mail fraud convictions as they related to the fraud allegations in the CFTC’s action. Accordingly, the court held that Qualls and IFC, through Qualls, had fraudulently solicited customers to trade in illegal off-exchange forex futures contracts by falsely telling customers that they would have individual accounts at a national bank insured up to $25 million. The court also held that Qualls and IFC, through Qualls, issued false account statements to customers showing purported profits and, instead of trading customer funds, misappropriated those funds by using them for personal expenses, in violation of the Commodity Exchange Act and CFTC regulations.
Qualls absconded to Canada before closing arguments in the criminal trial and was a fugitive until March 17, 2009, when Canadian authorities apprehended him. He currently is in a detention center in Montreal, Quebec, Canada, as U.S. authorities seek his extradition. He has not yet been sentenced.
The CFTC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York and the Québec Autorité des marchés financiers (AMF).
The U.S. Commodity Futures Trading Commission (CFTC) today announced that a federal court in New York ordered more than $4.6 million in restitution and a civil monetary penalty in a 2003 CFTC enforcement action against defendants Thomas Qualls and his company, International Foreign Currency, Inc. (IFC), which charged the defendants with misappropriation, fraudulent solicitation, and unlawfully offering off-Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term foreign currency (Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term) futures contracts.
Judge Dora L. Irizarry, of the U.S. District Court for the Eastern District of New York, entered an order granting the CFTC summary judgment, finding that the defendants had committed fraud as alleged in the CFTC’s complaint, and requiring the defendants to pay $814,733 in restitution and a $3.84 million civil monetary penalty for operating an illegal off-exchange forex futures fraud from November 2001 to July 2003.
The court’s order stems from a CFTC complaint filed on July 23, 2003, that charged Qualls, IFC, and Michael Kourmolis with fraudulently soliciting customers to trade illegal off-exchange forex futures contracts and Qualls and IFC with misappropriation of customers’ funds. Subsequently, on November 10, 2009, the court entered a consent order of permanent injunction against defendant Kourmolis.
On November 5, 2008, in a related criminal action, Qualls was found guilty by a federal jury on 16 counts, including mail and wire fraud, conspiracy to commit mail and wire fraud, and obstruction of justice. The obstruction of justice charges related in part to acts of obstruction in connection with the CFTC’s investigation and litigation. On November 6, 2008, the jury also returned a verdict on related forfeiture charges, finding that Qualls received proceeds in the amount of $922,382.
The court’s order against Qualls and IFC in the CFTC’s 2003 action held that the defendants could not re-litigate the underlying facts of Qualls’ criminal wire and mail fraud convictions as they related to the fraud allegations in the CFTC’s action. Accordingly, the court held that Qualls and IFC, through Qualls, had fraudulently solicited customers to trade in illegal off-exchange forex futures contracts by falsely telling customers that they would have individual accounts at a national bank insured up to $25 million. The court also held that Qualls and IFC, through Qualls, issued false account statements to customers showing purported profits and, instead of trading customer funds, misappropriated those funds by using them for personal expenses, in violation of the Commodity Exchange Act and CFTC regulations.
Qualls absconded to Canada before closing arguments in the criminal trial and was a fugitive until March 17, 2009, when Canadian authorities apprehended him. He currently is in a detention center in Montreal, Quebec, Canada, as U.S. authorities seek his extradition. He has not yet been sentenced.
The CFTC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York and the Québec Autorité des marchés financiers (AMF).