For Release: July 17, 2002
FLORIDA DEFENDANTS SETTLE CFTC COMPLAINT ALLEGING FOREIGN CURRENCY (FOREX) OPTIONS FRAUD
International Currency Strategies, Inc., Strategic Trading Group, Inc., Fairfield Currency Group, Inc., and Their Officers - Daniel Phillips and Valentin Fernandez - Are Permanently Barred From Trading Commodity Futures and Options
WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) announced today that it has settled an enforcement action against Daniel Phillips of Stuart, Florida, and Valentin Fernandez of West Palm Beach, Florida, and their companies, International Currency Strategies, Inc. (ICS) and Strategic Trading Group, Inc. The CFTC also settled with a related company, Fairfield Currency Group, Inc. of Delray Beach, Florida. The CFTC action, filed in April 2001 in the U.S. District Court for the Southern District of Florida, charged the defendants with fraudulently offering illegal foreign currency options and misappropriating customer funds (see CFTC News Release 4513-01 May 2, 2001).
The consent orders, entered by the court on July 15, 2002, find that, from December 2000 until April 2001, the defendants fraudulently telemarketed illegal foreign currency options contracts to individuals nationwide, making false claims to customers regarding the potential profitability and risk of foreign currency options trading.
According to the orders, defendants used high-pressure sales tactics to solicit investments and failed to furnish customers with required disclosure statements. Rather than buying options, defendants misappropriated all, or almost all, of the customer funds they received, using the funds for various personal expenses and resulting in customer losses of over $1 million, according to the orders. In consenting to the entry of the orders, defendants Phillips and ICS neither admitted nor denied the findings of orders or the allegations of the complaint.
The consent orders find that restitution to defrauded customers totaling approximately $1.06 million is appropriate, but recognizes that restitution is likely to be awarded in a related criminal action, United States v. Valentin Fernandez, Juan Fernandez, and Daniel Phillips, Cr. Action No. 01-CR-8060 (S.D. Fla. March 6, 2002), against defendants Phillips and Fernandez. It is expected that Phillips and Fernandez will be ordered to pay restitution in the criminal matter on behalf of a group of customers that includes all customers addressed by the CFTC action. If restitution is not awarded in the criminal action, or is not sufficient to cover the entirety of the losses suffered by customers in this action, defendants will be required to pay any deficiency in the restitution. In the event that restitution is ordered and paid in the criminal action in an amount sufficient to cover the losses in the CFTC action, defendants' restitution obligation in the CFTC action shall be deemed satisfied, according to the consent orders.
In addition, the consent orders permanently bar defendants from further violations of the Commodity Exchange Act, as charged; from trading futures and options contracts for others or themselves; and from registering, claiming exemption from registration with the CFTC, or acting as an agent or officer of any person registered, required to be registered, or exempt from registration, except as provided by Commission regulation 4.14(a)(9).
A copy of the orders may be found at www.cftc.gov.
The following Division of Enforcement staff are responsible for this case: Vincent McGonagle, Paul Hayeck, Angela Sierra, and Mary Kaminski.
Media Enforcement Contact:
Paul G. Hayeck
Acting Associate Director
CFTC Division of Enforcement
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