Release Number 8930-24

Federal Court Orders Unregistered Michigan Pool Operator and its President to Pay Over $13 Million for Forex Fraud

July 02, 2024

Washington, D.C. — The Commodity Futures Trading Commission today announced Judge Sean F. Cox of the U.S. District Court for the Eastern District of Michigan entered a supplemental consent order against Dwight A. Foster and his firm K.E.L. Enterprises, Inc., both based in the West Bloomfield, Michigan area.

The supplemental consent order requires Foster and KEL to pay, jointly and severally, $4,548,390.51 in restitution to defrauded victims, $803,126.83 in disgorgement, and a $1.6 million civil monetary penalty in connection with a fraudulent foreign currency (forex) scheme. On July 18, 2023, the court entered an initial consent order of permanent injunction against Foster and KEL. The initial consent order imposed a permanent injunction against Foster and KEL and banned them from trading in any CFTC-regulated markets and registering with the CFTC.

Additionally, the initial consent order found from January 1, 2017 to July 3, 2023 (the relevant period), KEL acted as a commodity pool operator (CPO) without being registered with the CFTC as a CPO as required, and Foster acted as an associated person (AP) of a CPO without being registered with the CFTC as an AP of a CPO as required. Also, KEL failed to make disclosures and maintain books and records as a CPO is required to do.

The initial consent order and supplemental consent order resolve the CFTC’s enforcement action Foster and KEL. [See CFTC Press Release No. 8744-23.]

Case Background

The initial and supplemental consent orders stem from the CFTC's June 28, 2023 complaint. The initial consent order found, during the relevant period, Foster and KEL engaged in a multimillion-dollar fraudulent scheme through which they solicited $13,214,327.88 from 50 people to participate in a commodity pool operated by Foster and KEL for the purpose of trading in commodity interests, including forex pairs on a leveraged, margined, or financed basis with participants who were not eligible contract participants (retail forex) and forex futures contracts. Instead of trading pool participants’ funds as promised, Foster and KEL misappropriated all of the pool participants’ funds by depositing them directly into KEL’s corporate bank accounts, which Foster controlled, rather than depositing the funds directly into an account in the name of the pool at a futures commission merchant and/or a retail foreign exchange dealer. Foster and KEL misappropriated the participants’ funds to pay Foster’s personal expenses, including, but not limited to, a car loan, insurance, credit card payments, and other daily living expenses. Additionally, Foster used not less than $8,665,937.37 of later-in-time participants’ funds to pay earlier-in-time participants purported “profits” and/or “redemptions” in the manner of a Ponzi scheme.

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.

The CFTC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of Michigan and the Federal Bureau of Investigation.

The Division of Enforcement staff responsible for this case are Timothy J. Mulreany, George H. Malas, Kassra Goudarzi, and Paul G. Hayeck.

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CFTC’s Forex Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories and Articles that provide the warning signs of fraud, including the Foreign Currency Trading (Forex) Fraud Advisory, which alerts customers to forex fraud and lists simple ways to spot forex scams.

The CFTC also strongly urges the public to verify an individual or company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that individual or 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), file a tip or complaint online, or contact the Whistleblower Office.

Whistleblowers may be eligible to receive between 10 and 30 percent of the monetary sanctions collected, paid from the Customer Protection Fund which is financed through monetary sanctions paid to the CFTC by violators of the CEA.