Alleged FX fraudster Jason Amada wants to stay CFTC action against him

Maria Nikolova

Jason Amada and Amada Capital Management LLC want to stay the CFTC action pending resolution in related criminal proceedings.

Less than two months after the United States Commodity Futures Trading Commission (CFTC) launched a civil action against Jason Amada and Amada Capital Management LLC, charging them with fraud and registration failures, the defendants have moved to stay the action brought by the US regulator.

On Monday, October 22nd, the defendants submitted a Motion to stay the civil case at the New York Southern District Court. The defendants ask for an Order staying this civil action as against the defendants pending resolution in the indictment and attendant criminal proceeding: People v. Jason Amada, Indictment No.: 3017-2018, Supreme Court, New York County.

This motion is made on the ground that a stay of this civil action is necessary to protect defendant Amada’s Fifth Amendment rights in connection with the above-referenced criminal proceeding, which arises from the same underlying facts as this civil action.

In addition, the civil action should be stayed as to defendant ACM, as the alleged sole owner and representative of ACM, defendant Amada is the sole person through whom ACM can present a meaningful defense. Absent a stay, the entity defendant is said to be precluded from offering any meaningful defense. According to Jason Amada, ACM is not even a separate entity; ACM is merely a name by which defendant Amada is alleged to do business.

Let’s recall that, in August this year, an impaneled Grand Jury in the Supreme Court of the State of New York, County of New York, indicted defendant Amada after hearing a presentation by the Attorney General of the State of New York . The indictment charges defendant Amada with Grand Larceny in the Second Degree in violation of New York Penal Law §155.40(1); and a Violation of New York General Business Law§ 352-c(6).

Defendant Amada is charged in a criminal indictment with alleged conduct that is identical to the allegations of the CFTC in the instant proceeding. Defendant Amada says he will be unable to offer any meaningful defense to the plaintiffs allegations, both on his own behalf and on behalf of defendant ACM, without waiving his Fifth Amendment rights. Only the issuance of a stay of the civil proceeding, he says, will preserve his constitutional rights and his ability to defend this action.

According to the indictment and statements made by the prosecutor at arraignment, in the summer of 2015, Amada allegedly fraudulently solicited a client and promised to save her the exchange fees that she would have otherwise been charged when converting Euros to U.S. dollars in order to purchase an apartment in Manhattan. Amada allegedly misrepresented his professional experience and his company’s historical profits and then convinced his client to open an online retail foreign exchange trading account and transfer control of approximately €250,000 to Amada. Amada also allegedly failed to disclose that his broker’s license had expired three years prior, in May 2012.

In order to further induce his client to invest, Amada allegedly executed a written contract promising the client that she would not lose more than one percent of the money invested, and that he would only take a commission if the account earned a profit. Contrary to his representations, once he had control of the money, Amada allegedly engaged in an aggressive and speculative day-trading strategy involving foreign currency orders, which generated commissions for Amada regardless of whether the trades resulted in a profit or loss for his client. Within just 45 days, this strategy generated over $150,000 in fees and commissions for Amada – but resulted in the loss of over 99% of his client’s initial investment of €250,000.

The CFTC Complaint charges that, from at least February 2014 through at least November 2015, the Defendants fraudulently solicited potential clients to open individually managed trading accounts for off-exchange foreign currency contracts (forex) and hid substantial trading losses incurred as a result of Defendants’ managed forex trading.

The CFTC Complaint alleges that the Defendants fraudulently solicited clients for these accounts by, among other things, misrepresenting Defendants’ forex trading experience and profitability. Furthermore, the Defendants made the false claim that they would implement a hedging strategy that would prevent losses of more than one percent. Also, Defendants attempted to conceal mounting losses by transferring some of their commissions into a client’s account. The Complaint also alleges that the Defendants failed to register with the CFTC as required.

In its continuing litigation, the CFTC seeks civil monetary penalties, permanent registration and trading bans, disgorgement, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC Regulations, as charged.

The civil case is captioned Commodity Futures Trading Commission v. Amada et al (1:18-cv-07895).

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