June 24, 2011
CFTC Charges Juvenal Machado and Florida-based Invers Forex, LLC with Defrauding Foreign Currency Customers of Almost $800,000 in Ponzi Scheme
Machado allegedly solicited friends, neighbors and members of his church, promising monthly profits of five percent or more.
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of an enforcement action charging Juvenal Eduardo Machado and his Miami, Fla.-based company, Invers Forex, LLC (Invers Forex), with defrauding approximately $786,000 from at least 28 customers, including Machado’s friends, neighbors and members of his church, through a retail foreign currency (forex) Ponzi scheme.
The CFTC complaint, filed in the U.S. District Court for the Southern District of Florida on June 23, 2011, alleges that, from December 2008 to at least October 2010, Machado and Invers Forex solicited customers to open managed accounts to trade forex and promised to pay monthly “interest” (i.e., profits) of five percent or more. Machado told prospective customers, many of whom attended prayer services in his home, that he had been very successful trading forex contracts, making consistent profits, and that he could give them “financial freedom and security” by trading their money in forex contracts, according to the complaint. He allegedly told at least one prospective customer that he never lost money trading forex. This statement was false, the complaint alleges.
Instead of opening trading accounts in the customers’ names and depositing their funds into those accounts as promised, defendants allegedly opened a single trading account in Machado’s name and pooled less than $135,000 of the customers’ funds in this account, almost 90 percent of which was lost in trading. Defendants allegedly never told the customers about these losses. Instead, they allegedly sent checks and cash to customers representing purported “interest” or profits and provided customers with tax statements reflecting these false profits. Customer funds not returned to the customers or lost in trading were misappropriated by defendants to pay Machado’s personal expenses and/or the business expenses of Invers Forex, according to the complaint.
Beginning at least as early as March 2010, some customers allegedly asked the defendants to return part or all of their funds. After responding to these requests with excuses and delay, Machado allegedly moved to Canada. Despite repeated demands from customers, defendants have not returned the balance of customers’ funds, according to the complaint.
In its continuing litigation, the CFTC seeks restitution to defrauded customers, a return of ill-gotten gains, civil monetary penalties, trading and registration bans and permanent injunctions against further violations of the federal commodities laws.
The CFTC appreciates the assistance of the United Kingdom’s Financial Services Authority.
The CFTC Division of Enforcement staff members responsible for this case are Matthew Elkan, Michael Loconte, Dan Jordan, Rick Glaser and Richard Wagner.
Last Updated: June 28, 2011