U.S. COMMODITY FUTURES TRADING COMMISSION AWARDED FINAL JUDGMENT IN FRAUD ACTION AGAINST WORLD BANKS FOREIGN CURRENCY TRADERS, INC. AND OTHERS
Defendants Ordered to Pay Over $8 Million in Restitution and Civil Penalties
WASHINGTON, D.C.—The U.S. Commodity Futures Trading Commission (CFTC) announced today that the United States District Court for the Southern District of Florida issued a Final Default Judgment imposing penalties against defendants World Banks Foreign Currency Traders, Inc. (World Banks) and International Investors Trading Group, Inc. (IITG) in a commodity telemarketing fraud case (see CFTC News Release, 4563-01, August 28, 2001). The court's order assessed $1,880,145 in restitution to repay defrauded customers, and $5,640,435 in civil monetary penalties.
In two other orders of default judgment issued the same day, U.S. District Judge Patricia A. Seitz also ordered defendants in the same action, Daniel Ledoux of Jupiter, Florida, and Bryant Crowder of Boca Raton, Florida, to pay respectively $499,749.50 and 390,750.74 in restitution and civil monetary penalties.
The court’s orders found that the defendants fraudulently telemarketed foreign currency options contracts to individuals in the United States and Canada in violation of the Commodity Exchange Act.
The CFTC complaint charged that the defendants solicited customers to invest in purported forex investments, by claiming that because of falling interest rates, a weakening U.S. dollar, or other market news, the value of the Euro or Japanese Yen was poised to skyrocket, which would allow quick-acting customers to make huge profits in a matter of weeks or months through the purchase of foreign currency options. According to the complaint, the defendants drastically downplayed the potential risk of loss by promising to use their years of expertise to watch the market closely and alert customers to get out of the market at the right time.
The complaint also alleged that after a customer decided to invest with World Banks, telemarketers continued their high-pressure tactics by sending account opening documents by fax and FedEx, urging that they be signed and sent back immediately, before potential customers had the opportunity to read them. According to the complaint, the defendants then became evasive or unavailable to customers once customers started inquiring about their investments. As alleged, customers ultimately lost most, if not all, of their money.
Gregory Mocek, the Commission's Director of Enforcement, said: "The facts of this case are similar to a large number of our recent FOREX prosecutions. These defendants were simply scam artists masquerading as Wall Street professionals. We will continue to flush out those who fraudulently prey on foreign currency customers. However, potential customers must do their homework. The exercise of due diligence should be as active as the rush toward exaggerated profit predictions."
The following CFTC Division of Enforcement staff members were responsible for this case: Timothy Mulreany, Robert Hildum, Mary Kaminski, Trabue Bland, and Paul Hayeck.
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