April 8, 2013
CFTC Charges New York Firm 4X Solutions, Inc. and its Principal, Whileon Chay, with Forex Fraud Ponzi Scheme
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of an enforcement action in the U.S. District Court for the Southern District of New York, charging Defendants 4X Solutions, Inc. (4X) and its principal, Whileon Chay, both of New York City, with fraud and misappropriation in a $4.8 million foreign currency (forex) trading Ponzi scheme.
The CFTC Complaint alleges that Chay and 4X fraudulently solicited approximately $4.8 million from at least 19 pool participants by falsely enticing prospective participants with the prospect of earning returns of 24 percent to 36 percent per year and claiming the ability to profit even in adverse market conditions, “when most have lost and lost dearly.” At the same time, Defendants minimized the risks of forex trading, claiming, for example, that Defendants had not suffered a single losing month in 14 years and that 4X provides “a safe haven in our current financial environment,” according to the Complaint.
The CFTC Complaint also alleges that Chay, who controlled 4X, lost approximately $2 million trading forex in corporate proprietary accounts and misappropriated approximately $2.8 million, using that money to fund 4X’s operations, make purported profit and investment return payments to their customers, and pay for Chay’s personal expenses, including paying for luxury resorts, expensive restaurants, limousine service, and exotic car rentals. The Complaint further alleges that Chay concealed the trading losses and misappropriation by, among other things, issuing or causing to be issued false monthly account statements and checks that purported to represent trading profits and investment returns. All or nearly all of the purported trading profits or returns made by Defendants came from the principal of other participants, the Complaint alleges.
In its continuing litigation, the CFTC seeks restitution to defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the Commodity Exchange Act, as charged.
CFTC Division of Enforcement staff members responsible for this case are Kara Mucha, August A. Imholtz III, James Garcia, Michael Solinsky, Gretchen L. Lowe, and Vincent A. McGonagle.
Last Updated: April 8, 2013