NEW YORK FOREIGN CURRENCY FIRM CHARGED WITH STEALING MORE THAN $2.2 MILLION IN COMMODITY SCAM
U.S. Commodity Futures Trading Commission Sues Lexington Royce & Associates and Artour Arakelian, Alleging They Defrauded More Than 50 Customers
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today that on April 12, 2004, a federal district court judge in New York, acting on a CFTC complaint filed earlier that day, issued an order freezing the assets and preventing the destruction of the books and records of defendants Lexington Royce & Associates (Lexington Royce) of New York City, and Artour Arakelian of Miami, Florida. Lexington and Arakelian were charged with fraud for allegedly misappropriating customer funds in a telemarketing scam where retail customers were solicited to trade foreign currency futures and options. The CFTC also charged the defendants with failing to conduct or execute the futures and options contracts that were offered on or subject to the rules of a contract market or foreign board of trade.
Specifically, the complaint alleged that since at least December 2003, defendants Lexington and Arakelian defrauded at least 50 retail customers by misappropriating more than $2.2 million defendants had solicited from customers for purported opportunities to speculate on the value of foreign currencies. According to the complaint, instead of trading customers' funds, defendants misappropriated most of the funds by sending the money to relief defendants 65J Inc. and United Factoring, LLC, in New York, or to offshore banks located in Latvia and Costa Rica. Offshore transfers were made to the benefit of relief defendants Morrish Alliance, Inc., Sergei Kyznetsov, and Productions Torre Fuerte Int’l, according to the complaint. The court-ordered asset freeze also applies to the relief defendants.
The CFTC is seeking a permanent injunction against each defendant, repayment to defrauded customers, a return of all ill-gotten gains from the defendants and relief defendants, and civil penalties for each violation of the Commodity Exchange Act.
The CFTC acknowledges the cooperation and assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.
The following CFTC Division of Enforcement staff members are responsible for this case: Jamie Brown, Lael E. Campbell, Joseph Rosenberg, Phillip Rix, John Dunfee, Paul Hayeck, and Joan Manley.
A copy of the CFTC complaint and restraining order may be obtained at www.cftc.gov.
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The CFTC Has Issued A Consumer Advisory Warning the Public of the Risks of Foreign Currency Trading and Foreign Currency Scams
The CFTC has issued a Consumer Advisory (at www.cftc.gov/cftc/cftccustomer.htm) urging the public to scrutinize claims of high-return, low-risk investment opportunities in foreign currency trading. This Consumer Advisory provides "red flags" to look for, and cautionary steps to be taken before making an investment. The CFTC has also issued Advisories concerning the Commodity Futures Modernization Act of 2000, and how FOREX firms may lawfully offer foreign currency futures and options trading opportunities to the retail public (see CFTC Press Release 4625-02, March 21, 2002, CFTC Advisory, March 21, 2002, and CFTC Advisory 06-01, February 5, 2001).
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