CFTC goes after binary options fraudsters who orchestrated $4.8m scheme

Maria Nikolova

From at least January 2016, William Thomas Caniff, Arie Bos, Berkley Capital Management, BBOT 1, and Berkley II, have engaged in a scheme whereby they fraudulently solicited $4.8 million from 62 commodity pool participants.

The United States Commodity Futures Trading Commission (CFTC) continues with its efforts to stop binary options fraud. On May 1, 2019, the regulator filed a lawsuit at the Illinois Northern District Court targeting a raft of entities that were responsible for a $4.8 million fraudulent binary options scheme.

According to the CFTC Complaint, seen by FinanceFeeds, from at least January 2016 and continuing through the present, William Thomas Caniff, Arie Bos, Berkley Capital Management, LLC (BCM), BBOT 1, LP and Berkley II, LP, have engaged in a scheme whereby they fraudulently solicited and accepted at least $4.8 million from at least 62 commodity pool participants for the purpose of trading binary options on or subject to the rules of a designated contract market in pool accounts to be managed by BCM.

The CFTC alleges that all of the defendants committed options fraud, whereas Caniff is said to also have made a false statement to a registered entity.

In January 2016, Caniff and Bos formed BCM and began to offer individual participants the opportunity to trade binary options with pools of other participants, first through the BBOT pool and later through the Berkley II pool. Caniff used a small portion of participants’ funds to trade binary options through an account he set up at the binary options trading firm, the North American Derivatives Exchange, Inc. (NADEX), which is a designated contract market headquartered in Chicago, Illinois.

Caniff sent Bos fabricated statements reflecting incredible results of his trading for these pools. In turn, Bos ignored numerous red flags and recklessly accepted Caniff’s reports of profitable trading without verifying the results in any way and used them to both solicit participants with claims of past profitable trading and generate false statements that he sent to participants showing grossly-inflated, non-existent, profits for their accounts.

The CFTC Complaint alleges that Caniff misappropriated a substantial portion of the participants’ funds, paying Bos and himself between $1.1 million to $1.2 million each as “fees based on non-existent profits. Caniff also misappropriated funds to pay some participants a total of $2.3 million in a manner akin to a Ponzi scheme. Overall, the defrauded participants have experienced a shortfall of approximately $2.5 million.

The Commission says it brings this action to enjoin the defendants’ unlawful acts and practices and to compel the defendants’ compliance with the Act and the Regulations. In addition, the CFTC 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.

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