December 21, 2018
Federal Court Orders Forex Trading Firm and Its Principal to Pay More Than $1.6 million for Fraudulent Forex Pool Scheme
Washington, DC — The Commodity Futures Trading Commission (CFTC) announced today that on December 7, a federal court ordered New York firm Wright Time Capital Group LLC (d/b/a Global FX Club) (WTCG) to pay more than $1.48 million in civil monetary penalties and restitution in connection with an enforcement action brought by the CFTC charging the defendants with fraudulent solicitation and misappropriation involving a forex pool.
The Memorandum Order and a concurrently filed Order for Final Judgment by Default (collectively, the Default Orders) require WTCG to pay a civil monetary penalty of $1,113,750 and restitution of $371,250, impose permanent trading and registration bans on WTCG, and permanently prohibits WTCG from violating the Commodity Exchange Act (CEA). A Consent Order previously entered by the court on August 2, 2018 against WTCG’s chief executive officer, former New Jersey resident Michael S. Wright (Wright), requires Wright to pay a civil monetary penalty of $100,000 and restitution of $400,000 and also imposes permanent trading and registration bans on Wright, and permanently prohibits Wright from violating the CEA.
The court’s orders stem from a CFTC Complaint filed on June 22, 2017 in the U.S. District Court for the Southern District of New York. [See CFTC Press Release 7576-17] The Default Orders found that WTCG and its agent Wright engaged in a systematic scheme to perpetrate fraud. Specifically, the Default Orders found that WTCG, by and through its officers including Wright, fraudulently solicited pool participants to invest in a commodity pool for forex trading, misrepresented that pool participants’ funds would be used to engaged in forex trading, and misappropriated pool participants’ funds. According to the Default Orders, WTCG issued false accounts to pool participants that inflated and misrepresented the value of pool participants’ accounts and the pool’s trading returns and that otherwise did not disclose that the pool suffered significant trading losses or that some or all of their funds were actually misappropriated and never used for forex trading.
The Default Orders also found that WTCG failed to register with the CFTC as a Commodity Pool Operator and that WTCG commingled pool funds, failed to receive pool participants’ funds in the pool’s name, and failed to operate the pool as a separate entity, as required. According to the Consent Order, Wright engaged in the solicitation fraud, misappropriation, and false statements described above. The Consent Order also found that Wright was liable for WTCG’s violations as a controlling person because he knowingly induced the underlying violations or failed to act in good faith.
In a parallel criminal case filed in the United States District Court for the Southern District of New York, Wright pled guilty on October 13, 2017 to one count of commodities fraud pursuant to a written plea agreement. On January 25, 2018, the district court sentenced Wright to 21 months of prison and three years of supervised release and ordered Wright to pay $358,070 in restitution. [See United States v. Wright, No. 17-CRIM-459 (PAE) (S.D.N.Y.)]
The CFTC cautions victims that restitution orders may not result in the recovery of 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.
The CFTC Division of Enforcement staff members responsible for this action are Alejandra de Urioste, Trevor Kokal, K. Brent Tomer, Lenel Hickson Jr., and Manal M. Sultan.