Release Number 8217-20

CFTC Obtains $3.8 Million Fraud Judgment Against Commodity Pool Operator and its Owner

June 23, 2020

Washington, D.C. The Commodity Futures Trading Commission today announced that the U.S. District Court for the Southern District of New York entered a default judgment on June 23, 2020 against defendants VOS Capital Management, LLC and its owner Dominick Vincent Carducci, both of Clemson, South Carolina, for fraud in connection with a commodity pool they operated.

The judgment requires the defendants to pay $953,875 in restitution to defrauded pool participants and a civil monetary penalty of over $2.86 million. The judgment also imposes permanent trading and registration bans on the defendants and prohibits them from violating provisions of the Commodity Exchange Act, as charged. This judgment resulted from a CFTC complaint filed on September 9, 2019 that charged the defendants with fraud, misappropriation, and failing to register with the Commission as required. [See CFTC Press Release No. 8004-19] The court found that the defendants’ failure to respond to the complaint amounts to an admission of the complaint’s allegations.

Related Criminal Action

Carducci entered a guilty plea in a related criminal case in the U.S. District Court for the District of South Carolina. On June 19, 2020, he was sentenced to 24 months in prison and ordered to pay more than $950,000 in restitution. [See U.S. v. Carducci, 6:19-cr-00469-BHH (D.S.C.)]

Case Background

As alleged in the complaint, starting in at least August 2016, defendants fraudulently solicited and misappropriated money from at least 30 individuals for pooled trading in retail foreign exchange (forex). In addition, between August 2016 and September 2018, the defendants received at least $1.1 million from pool participants for commodity pools that would purportedly trade forex. However, the defendants never traded forex on behalf of pool participants, but instead misappropriated the majority of funds to pay Carducci’s personal expenses and to support his lavish lifestyle. Defendants concealed the fraud by issuing false account statements to participants.

In order to entice potential participants to deposit funds with them, the defendants falsely represented that, among other things, they had a history of making large profits from trading forex and they maintained a forex trading account with a registered foreign exchange dealer that held $12 million under defendants’ management. The defendants also falsely asserted that that they would trade forex on behalf of pool participants that would yield profits of up to 18% per month without suffering any losses.

Additionally, the defendants falsely claimed that pool participants could withdraw their funds upon request. In actuality, they ignored pool participants’ withdrawal requests and lied about the conditions that purportedly prevented the return of participants’ funds. The defendants also sent fraudulent account statements to pool participants claiming they were making money from forex trading when no trades were ever executed.

The CFTC cautions that orders requiring payment of funds to victims may not result in the recovery of any money lost because 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 appreciates the assistance of the U.S. Attorney’s Office for the District of South Carolina in this matter.

The Division of Enforcement staff members responsible for this case are Linda Y. Peng, Alben Weinstein, David W. MacGregor, Lenel Hickson, Jr., and Manal M. Sultan.

CFTC’s Commodity Pool Fraud Advisory 

The CFTC has issued several customer protection Fraud Advisories, including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud involving individuals and firms, often unregistered, offering investments in commodity pools. 

The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC. 

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.

-CFTC-