CFTC charges WorldWideMarkets with $4.8M forex fraud scheme
The Commodity Futures Trading Commission (CFTC) has charged retail brokerage firm WorldWideMarkets and its New Jersey-based CEO for illegally collecting nearly $5 million in an alleged forex fraud.
According to a statement posted on the CFTC’s website, Worldwide Markets, Ltd., registered in the British Virgin Islands, and the company’s CEO Thomas Plaut had solicited US residents to trade foreign currency contracts and other assets.
The complaint has identified other participants in the plot as TAB Networks and New York resident Arthur Dembro, charging them with fraud and other violations. Dembrowho was the chief financial officer of both WorldWideMarkets and TAB Networks, and is alleged to have aided the fraud.
The complaint accuses both companies and their operatives of acting as a counterparty to forex transactions with 14,000 retail customers between 2012 and 2018. Although the business operated out of a New Jersey office, Plaut organized WorldWideMarkets in the British Virgin Islands to turn around US registration and customer protection regulations that apply to retail forex dealers.
Plaut also failed to register with the CFTC as required, and fraudulently sought participants by lying about the company’s market position and investment track record.
The CFTC further alleges that customers were offered “quick and easy” account opening. WorldwideMarkets furthered its fraudulent scheme by misappropriating at least $4.7 million of customer deposits. The company used the funds for undisclosed purposes such as financing other business lines, reimbursing employee expenses and to make cash distributions to Plaut.
CFTC flexes muscles against FX firms
As a result, WorldwideMarkets has not honored a single customer withdrawal request since 2017.
The CFTC has asked the court to provide full restitution to defrauded pool participants, disgorgement of ill-gotten gains and to pay the appropriate civil monetary penalties. In addition to fiscal claims, the agency seeks permanent registration and trading bans and a permanent injunction from future violations of federal commodities laws.
The CFTC has been active recently as US regulators continue their cleanup of the forex space, this time with charges of fraud being brought against a dozen of brokers and trading apps.
“This complaint underscores the critical importance of the CFTC’s registration requirements and that market participants comply with applicable customer protection regulations,” said Acting Director of Enforcement Vincent McGonagle. “It should come as no surprise that a company that avoided a requirement to maintain sufficient levels of adjusted net capital would become insolvent after operating in a Ponzi-like manner for years.”