CFTC obtains default judgment against VOS Capital Management and Dominick Carducci
The defendants will have to pay a civil monetary penalty of $2.86 million.
The United States Commodity Futures Trading Commission (CFTC) has managed to secure a win in another case targeting a fraudulent Forex scheme. On June 23, 2020, Judge P. Kevin Castel of the New York Southern District Court signed a default judgment against VOS Capital Management and Dominick Carducci.
Because the defendants have not answered or appeared, the CFTC’s motion for entry of default judgment was granted. As a consequence of defendants’ default, Carducci is permanently restrained, enjoined and prohibited from directly or indirectly engaging in conduct in violation of Sections 4b(a)(2)(A)-(C), 4o(1), 2(c)(2)(C)(iii)(I)(cc), and 4k(2) of the Act and Regulations 5.2(b) and 5.3(a)(2)(ii). Also, VOS Capital is permanently restrained, enjoined and prohibited from directly or indirectly engaging in conduct in violation of Sections 4b(a)(2)(A)-(C), 4o(1), 2(c)(2)(C)(iii)(I)(cc), and 4m(1) of the Act and Regulations 5.2(b) and 5.3(a)(2)(i).
The defendants are also permanently restrained, enjoined and prohibited from, directly or indirectly trading on or subject to the rules of any registered entity.
Carducci and VOS Capital will have to pay, jointly and severally, restitution in the amount of $953,875. They will also have to pay a civil monetary penalty in the amount of $2,861,625 (the “CMP Obligation”), which is equivalent to triple the monetary gain to the defendants from their violations.
According to the CFTC Complaint, from at least August 2016 through in or about September 2018 (the Relevant Period), the defendants operated a fraudulent scheme in which they solicited, accepted and misappropriated funds for a pooled investment vehicle in off-exchange leveraged or margined Forex contracts.
Carducci, as an officer and agent of VOS Capital, is alleged to have knowingly made fraudulent and material misrepresentations and omissions, in both conversations and written communications, about his FX trading and returns to persuade at least thirty individuals to transfer at least $1.1 million to the defendants for the purpose of participating in a pooled forex investment vehicle.
The CFTC says that VOS Capital and Carducci have engaged, are engaging, or are about to engage in acts and practices in violation of a number of sections of the Commodity Exchange Act, and rules of Commission Regulation, which prohibit fraud in connection with forex transactions and fraud by a commodity pool operator (CPO).
In addition, VOS Capital acted at all times during the Relevant Period as a CPO by operating or soliciting funds for a pooled investment vehicle that is not an eligible contract participant (ECP) and that engages in retail FX transactions, without being registered with the Commission as a CPO, as required by the Act and Regulations. In particular, VOS Capital’s failure to register as a CPO violated Sections 2(c)(2)(C)(iii)(I)(cc) and 4m(1) of the Act, 7 U.S.C. §§ 2(c)(2)(C)(iii)(I)(cc), 6m(1) (2012), and Regulation 5.3(a)(2)(i), 17 C.F.R. § 5.3(a)(2)(i) (2018).
Carducci solicited funds for participation in a pooled investment vehicle for the purpose of trading in off-exchange leveraged or margined forex contracts, while associated with VOS Capital as an officer, employee, or agent, without being registered with the Commission as an associated person (AP) of VOS Capital, as required by the Act and Regulations. Specifically, Defendant Carducci’s failure to register as an AP of a CPO violated Sections 2(c)(2)(C)(iii)(I)(cc) and 4k(2) of the Act, 7 U.S.C. §§ 2(c)(2)(C)(iii)(I)(cc), 6k(2) (2012), and 17 C.F.R. § 5.3(a)(2)(ii).
