Release Number 7432-16
August 22, 2016
CFTC Orders California Resident Irina Feldman and her Companies Cindium Inc. and Einstein Exchange Group Inc. to Pay More than $600,000 for Solicitation Fraud and Misappropriation in Commodity Pool Scheme
All of Pool Participants’ Funds Were Misappropriated to Pay “Monthly Returns” to Participants and for Personal and Business Expenses
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Respondents Irina Feldman, Cindium Inc. (Cindium), and Einstein Exchange Group Inc. (Einstein) for committing solicitation fraud and misappropriation in connection with operating a commodity pool that offered foreign currency (forex) and commodity futures transactions, among other investments and for failing to register with the CFTC as Commodity Pool Operators (CPOs) and Commodity Trading Advisors (CTAs) as required. Feldman is a resident of Beverly Hills, California, and Cindium and Einstein are located in Century City, California. None of the Respondents has ever been registered with the CFTC.
The CFTC Order requires Feldman, Cindium, and Einstein jointly and severally to pay restitution of $401,000 and a $200,000 civil monetary penalty and permanently prohibits them from trading on any registered entity, as defined in the Commodity Exchange Act (CEA), or from registering with the CFTC. The Order also requires them to cease and desist from violating the provisions of the CEA and CFTC Regulations, as charged.
According to the Order, from in or about December 2015 to at least May 2016, the Respondents fraudulently solicited, accepted, and received approximately $401,000 from at least 30 individuals to participate in a commodity pool to trade off-exchange forex and commodity futures, among other investments, but they did not trade any of these funds and had no active trading accounts in their names. Instead of trading these funds, the Order finds that the Respondents misappropriated all of pool participants’ funds, which were used by Respondents to make payments of “monthly returns” to pool participants and to pay for personal and business expenses, including travel, meals, car payments, payment of traffic violations, and purchases at luxury retailers like Louis Vuitton.
The Respondents, using an internet website, solicited prospective pool participants to invest by loaning money to Cindium for the purpose of trading primarily forex, as well as futures, options, commodities, and for other investments, the Order finds. Pool participants were given loan agreements guaranteeing monthly returns on investments of 2% to 5%, although the website guaranteed returns of between 2% to 10%. The Respondents’ fraudulent solicitations also included guaranteeing that principal investments would never lose value, the Order finds.
The Order further finds that both Einstein and Cindium acted as a CPO and CTA without registering as such with the CFTC as required; that Feldman is liable for Cindium’s and Einstein’s violations as their CEO, owner, and controlling person; and that Cindium and Einstein are liable for Feldman’s violations because Feldman was acting for Cindium and Einstein within the scope of her employment, office, or agency with Cindium and Einstein when she committed her violations.
The CFTC cautions that Orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
CFTC Division of Enforcement staff members responsible for this action are Mark Picard, Katie Rasor, Christopher Giglio, Steven Ringer, Lenel Hickson, Jr., and Manal M. Sultan.
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CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud that involves individuals and firms, often unregistered, offering investments in commodity pools.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
Last Updated: August 22, 2016