For Release: September 29, 2008
Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) announced today that U.S. District Court Judge George Daniels of the Southern District of New York entered orders against five defendants in three CFTC cases stemming from the cooperative law enforcement investigation code-named “Operation Wooden Nickel” conducted by the CFTC, the Federal Bureau of Investigation, the Department of Justice, and the Securities and Exchange Commission. The orders require that the defendants pay millions of dollars in fines and that they return customer funds.
A total of seven separate orders requiring payment of approximately $11.7 million in restitution and disgorgement and $12.25 million in civil monetary penalties were issued in CFTC v. Walter Scott Lev, et al., No. 03-cv-9126 (S.D.N.Y. filed Nov. 18, 2003), CFTC v. ItradeCurrency USA, LLC, et al., No. 03-cv-9129 (S.D.N.Y. filed Nov. 18, 2003), and CFTC v. Bursztyn, et al., No. 03-cv-9125 (S.D.N.Y. filed November 18, 2003).
The five defendants subject to these orders were sued by the CFTC on November 18, 2003 (see CFTC News Release 4867-03, November 19, 2003), in three actions for engaging in fraud in the sale and solicitation of illegal forex futures contracts. Between 2006 and 2008, Judge Daniels entered orders imposing monetary sanctions totaling more than $50 million, permanent injunctions, and other relief against 27 other defendants (see CFTC News Releases 5265-06 (December 19, 2006), 5315-07 (April 12, 2007), and 5490-08 (April 22, 2008)).
Walter Scott Lev, et al.
The court entered separate consent orders against Michael Ross and Edward Sapienza, Jr. both of New York, NY, and an order of default judgment against New York forex investment firm Walter, Scott, Lev & Associates, LLC (WSL), requiring Ross and Sapienza to pay $240,000 each in civil monetary penalties, and requiring WSL to pay more than $10.4 million in restitution and disgorgement and more than $10.8 million in civil monetary penalties. The orders ban all of them from trading on markets subject to the CFTC’s jurisdiction or registering with the CFTC due to their roles in defrauding customers in an illegal forex scheme.
In the orders against Ross, Sapienza, and WSL, the court found that from January 1999 to April 2002, while operating the forex investment firm WSL, they intentionally made fraudulent misrepresentations regarding the actual trading of much of their customers’ funds, issued false account statements to customers showing considerable profits, and then told customers that catastrophic trading losses had wiped out their funds.
Recognizing that Ross and Sapienza are jointly and severally liable with other defendants for a $6,800,951 restitution order pursuant to criminal judgments entered against them in a parallel criminal action, U.S. v. Ross, et al., S.D.N.Y. Docket No. 03 Cr 01306-02 (DLC), the Court did not order additional restitution against Ross and Sapienza in this civil matter.
ItradeCurrency USA, LLC, et al., and Bursztyn, et al.
The Court entered separate default judgment orders against Stephen E. Moore of New York, NY and ItradeCurrency USA, LLC (ITC), a New York company, in the two separate actions requiring them to pay more than $1.3 million in restitution and $960,000 in penalties. The restitution obligations are shared jointly and severally with specified co-defendants in the respective actions.
In the orders against Moore and ITC, the court found that from December 2000 to November 2003, Moore and ITC fraudulently obtained funds from customers of ITC to trade illegal off-exchange forex futures contracts and misused and misappropriated a substantial portion of those funds. The Court further found that from May to November 2003, Moore and ITC participated in a “knowledgeable trades” scheme whereby they helped to defraud and deceive banks by engaging in illegal forex transactions to convert bank funds and concealing the conversion from the banks.
The CFTC would like to thank the FBI and the U.S. Attorney’s Office for the Southern District of New York for their assistance.
The following CFTC staff members are responsible for this case: Sheila Marhamati, Joseph Rosenberg, Philip Rix, Steven Ringer, Lenel Hickson, Stephen Obie, and Vincent McGonagle.
Last Updated: September 29, 2008