CFTC pushes for fines in action against binary options fraudsters
The regulator asks the Court to impose fines of $1,000 per day on David Gilbert Saffron and Circle Society over their failure to comply with a civil contempt order.
Shortly after the Nevada District Court issued an order threatening to fine binary options scammers David Gilbert Saffron and Circle Society, the Commodity Futures Trading Commission (CFTC) has asked the Court to impose the penalties due to the defendants’ non-compliance with the Court’s orders.
Finding the defendants in civil contempt, the Court has ordered them to, no later than February 7, 2020, make available to the CFTC, for inspection and reproduction, all of their books, records and other documents outlining in detail all efforts by defendants and their agents to locate the defendants’ books, records and other documents.
No later than February 7, 2020, the defendants had to provide the CFTC with a full accounting of each defendant’s assets, held jointly or separately, within or outside the United States, beginning from December 2017 for Saffron and from September 2018 for Circle Society.
Also, no later than February 7, 2020, the defendants had to provide written responses to the CFTC, under oath, to several questions – for instance, one question concerns any virtual currency addresses the defendants have.
In a notice filed with the Court on February 8, 2020, and seen by FinanceFeeds, the CFTC explains that, on February 6, 2020, Saffron produced three files to the CFTC via the CFTC’s FTP site, which included: (1) a letter to the CFTC; (2) an Excel spreadsheet described by Saffron as a “partially restored client list”; and (3) a blank Protective Order template. The CFTC views these documents as non-compliant with the Court’s order.
Further, to date, the defendants have not provided any type of accounting to the CFTC. The regulator says that the defendants have not identified a single asset, a single bank account, a single virtual currency account, or any personal property.
Finally, the defendants have not provided any written responses to the questions in the Order.
The CFTC requests that the Court impose without delay the daily compliance fines of $1,000 against Saffron and $1,000 against Circle Society for each day they are in non-compliance with the Civil Contempt Order. In addition, the regulator intends to submit a motion for additional coercive sanctions if the defendants continue their contemptuous conduct and non-compliance with the Court’s orders.
The regulator accuses the defendants of fraudulent solicitation, misappropriation, and registration violations relating to an $11 million binary options scheme. The CFTC complaint alleges that the defendants fraudulently solicited funds from at least fourteen members of the public to participate in a pool operated by Circle Society, an entity Saffron created and used to perpetrate his fraud, by making false claims of Saffron’s trading expertise and guaranteeing rates of return up to 300%.
The defendants misappropriated funds, including by retaining participants’ funds in Saffron’s personal electronic cryptocurrency wallet and by using funds to pay other participants, in the manner of a Ponzi scheme. The defendants then lied to participants in order to conceal their misappropriation.
The CFTC seeks full restitution to defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity Exchange Act and Commission regulations.
