CFTC secures entry of default against Michael Salerno, Black Diamond Forex and Advanta FX

Maria Nikolova

The defendants have failed to answer or otherwise plead in a case brought against them by the US regulator.

A civil action brought by the United States Commodity Futures Trading Commission (CFTC) against an ex-convict who allegedly perpetrated a Forex fraud on hundreds of people appears to be close to its end, as the US regulator has secured an entry of default against the defendants.

The case targets Michael J. Salerno, Black Diamond Forex LP, BDF Trading LP (d/b/a “Advanta FX”), and Advanta Capital Markets, Inc. (d/b/a “Advanta FX”).

As per the CFTC Complaint, 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 websites such 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.

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 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.

Earlier this week, Judge Cynthia M Rufe of the Pennsylvania Eastern District Court ruled on a CFTC motion for entry of default against all defendants. The regulator had argued that the defendants have failed to answer or otherwise plead and, hence, are in default. The Judge agreed with the CFTC and granted the motion.

The Clerk of Court has been directed to enter a default against Defendants Michael J. Salerno, Black Diamond Forex LP, BDF Trading LP, and Advanta Capital Markets, Inc., and against Relief Defendants Black Diamond Investment Group LLC and Advanta Capital Markets LTD., f/k/a Black Diamond Capital LTD., f/k/a Black Diamond Forex LTD.

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

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