CFTC goes after ex-convict over proprietary Forex trading fraud - FinanceFeeds

CFTC goes after ex-convict over proprietary Forex trading fraud

When soliciting funds, Michael J. Salerno forgot to mention his felony conviction and his Chapter 7 bankruptcy filing.

Once bitten, twice… arrogant and fraudulent. Past convictions did not prevent Michael J. Salerno, agent and officer of Black Diamond Forex LP, BDF Trading LP (also known as Advanta FX), and Advanta Capital Markets, from perpetrating a Forex fraud on hundreds of people solicited to become employees and/or proprietary FX traders via his firms.

The Commodity Futures Trading Commission (CFTC) has taken action against Salerno at the Pennsylvania Eastern District Court.

According to the CFTC Complaint, seen by FinanceFeeds, beginning in at least January 2017 and continuing through at least March 2018, Salerno solicited individuals to become proprietary traders in the Black Diamond Entities. He advertised certain positions for his trading firm on online websites commonly known as LinkedIn, and Indeed.com. Advertised positions included Forex Trader, Director of Risk Management, and Trading Floor Manager/Director of FX Operations. Salerno also advertised these positions on blackdiamondforex.com (BDF), bdftrading.com and/or bdf-trading.com (BDFT), and advantafx.com (ACMI).

As part of the hiring process, Salerno and his companies required that prospective traders provide what was referred to as a “risk deposit” or “risk capital deposit” in varying amounts usually ranging from $1,200 to $1,900. The CFTC estimates that Salerno hired no less than at least 150 prospective traders to work at the Black Diamond Entities.

In oral and written communications with prospective traders, Salerno made numerous fraudulent misrepresentations and omissions. Thus, for instance, he claimed that he would match the prospective trader risk capital deposit with a multiple of (usually 10 times) the prospective trader’s risk capital deposit and place the combined funds in a live proprietary forex trading account set up for the prospective trader. That never happened.

More importantly, Salerno did not disclose to current and prospective traders and employees that:

  • in 2003 he was indicted by a federal grand jury on an 18-count indictment charging him with wire fraud, the failure to account for and pay over employment taxes, and filing two false income tax returns,
  • in 2005 he was convicted of failing to file the proper payroll tax forms and paying employment taxes to the IRS in connection with a real estate investment firm, and/or
  •  that he was sentenced to twenty-one months confinement and three years of supervised release for his criminal offenses.
  • in May 2015 he filed a voluntary Chapter 7 bankruptcy petition, the same year he claimed on the Black Diamond Forex (BDF) website to have sold ten million dollars in real estate to fund the BDF forex venture.

Salerno and his entities are charged with Fraud in Connection with Retail Forex Transactions.

The CFTC is seeking, inter alia, civil monetary penalties for each violation, and remedial ancillary relief, including trading and registration bans, restitution, and disgorgement.

The case is captioned Commodity Futures Trading Commission v. Salerno et al (2:18-cv-01585).

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