Release Number 8725-23
Federal Court Orders Florida Man to Pay Over $1 Million in Penalties for Fraudulent Solicitation and Misappropriation in a Commodity Pool Scheme
June 21, 2023
Washington, D.C. — The Commodity Futures Trading Commission today announced the U.S. District Court for the Southern District of Florida entered an order of final judgment against Rico Cox of Fort Lauderdale, Florida. The order resolves the CFTC’s May 31, 2022 lawsuit against Cox and finds him liable for fraudulently soliciting investments in commodity futures and misappropriating at least 14 pool participants’ funds. [See CFTC Press Release No. 8537-22].
The court’s order of default judgment and permanent injunction permanently enjoins Cox from engaging in conduct that violates the Commodity Exchange Act (CEA), orders him to pay $710,667 in restitution, $339,300 in disgorgement, as well as a $1,017,900 civil monetary penalty. The order also permanently bans Cox from registering with the CFTC and from trading on any registered entity.
In entering this order, the court found Cox falsely claimed he was a successful trader with years of experience trading futures contracts. The court also found Cox failed to tell participants that in 2016 he was found liable for fraudulently soliciting funds to trade in a managed futures account in a CFTC case against him. Those charges resulted in permanent trading and registration bans and a $941,000 judgment. [See CFTC Press Release No. 7383-16].
The court found that to perpetuate his fraud scheme, Cox issued false statements to participants showing false profits purportedly earned with their investments and he grossly exaggerated account balances. For instance, the court found Cox sent a participant a purported account statement from a futures trading commission merchant showing an ending balance of $1,389,091.26 when on that date the account had already been closed with a zero balance. Today’s court order also found Cox misappropriated participant funds.
The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoer 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 Division of Enforcement staff members responsible for this case are Susan B. Padove, Joseph J. Patrick, Venice M. Bickham, David A. Terrell, Scott R. Williamson, Robert T. Howell, and former staff member Cristina Covarrubias.
CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories and Articles, including the Commodity Pool Fraud Advisory, which provides information 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 Commission 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 or contact the CFTC Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collection paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.