CFTC charges Simply Gains and its principal Erik Jon Hass with Forex fraud
According to the regulator, Erik Jon Hass, through Simply Gains, operated a fraudulent FX scheme in which he solicited at least $2.1 million.
The United States Commodity Futures Trading Commission (CFTC) continues its efforts to put and end to Forex fraud. Earlier this week, the regulator launched an action against Simply Gains and its principal and agent Erik Jon Hass.
According to the CFTC’s complaint, submitted at the Oregon District Court, from at least March 2013 through in or about February 2019, Hass, individually and via Simply Gains, operated a fraudulent scheme in which he solicited and accepted at least $2.1 million from at least 21 individuals for a pooled investment vehicle in off-exchange leveraged or margined Forex contracts. The defendants are alleged to have misappropriated at least $415,000 of the funds deposited by the pool participants.
The defendants allegedly falsely claimed, inter alia, that they had made large profits for themselves and the pool participants by trading forex, and that the pool participants would realize profits of 2% per month. The defendants also misrepresented that they would donate an additional 0.5% per month to charities of the pool participants’ choice. Finally, the defendants made false promises that the pool participants could withdraw the funds they had deposited without any loss of principle or profits by providing sixty days’ notice.
The defendants omitted material facts such as that they traded only a portion of the pool participants’ funds and that Hass regularly lost money trading forex, as well as that neither defendant was registered with the CFTC as required by federal law.
In reality, the defendants failed to trade the pool participants’ funds as promised and, instead, misappropriated much of their money and lost the rest by trading with no stop loss. The defendants commingled investors’ funds with Hass’s own funds and used them to pay Hass and his wife salaries that were never disclosed to Pool Participants, to pay Hass’s personal expenses including a Caribbean cruise, and to pay down his mortgage. Other amounts were paid to some Pool Participants, in the manner of a Ponzi scheme. The remainder was lost in forex trades using 50:1 leverage with no stop loss in place.
The CFTC charges the defendants with Forex fraud, as well as with failure to register with the Commission.
According to the regulator, unless restrained and enjoined by the Court, the defendants will likely continue to engage in fraudulent acts and practices.
In this action, the Commission seeks civil monetary penalties and remedial ancillary relief, including, but not limited to, trading and registration bans, restitution, disgorgement, rescission, pre- and post- judgment interest, and such other and further relief as the Court may deem necessary or appropriate.