CFTC takes VOS Capital Management and Dominick Carducci to Court over FX fraud

Maria Nikolova

Carducci, as an officer and agent of VOS Capital, persuaded at least thirty individuals to transfer approximately $1.1 million to the defendants for the purpose of participating in a pooled forex investment vehicle.

The United States Commodity Futures Trading Commission (CFTC) has taken action against another fraudulent Forex scheme. On September 9, 2019, the US regulator filed a Complaint against Dominick Vincent Carducci and his VOS Capital Management, LLC, with the New York Southern District Court.

According to the CFTC Complaint, from at least August 2016 through in or about September 2018 (the Relevant Period), Dominick Vincent Carducci, individually and as agent and principal of VOS Capital Management, LLC, 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 (the Pool Participants) to transfer at least $1.1 million to the defendants for the purpose of participating in a pooled forex investment vehicle.

To lure prospective Pool Participants, the defendants represented, inter alia, that they had made large profits for themselves and Pool Participants from trading forex; that they maintained a forex trading account with a registered foreign exchange dealer that had $12 million under their’ management; that the defendants would trade forex on behalf of Pool Participants; that Pool Participants would realize profits of up to 18% per month on their investments without losses; and that upon request Pool Participants could withdraw the funds they had invested.

According to the allegations, VOS Capital and Carducci failed to trade Pool Participants’ funds as promised and, instead, misappropriated most of their money. Upon the defendants’ direction, Pool Participants deposited their funds into VOS Capital’s bank account. The defendants used the majority of those funds to pay Carducci’s personal expenses, and to support Carducci’s lavish lifestyle by, among other things, acquiring luxury automobiles and paying for international travel. The remainder of the funds was paid to some Pool Participants, in the manner of a Ponzi scheme.

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).

The Commission says it brought this action to enjoin the unlawful acts and practices of Carducci and VOS Capital and to compel their compliance with the Act and the Regulations. In addition, the Commission 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, and such other and further relief as the Court may deem necessary or appropriate.

The regulator notes that, unless restrained and enjoined by the Court, the defendants are likely continue to engage in the acts and practices alleged in the Complaint.

Read this next

Digital Assets

BlackRock digs further into crypto with metaverse ETF

BlackRock, the world’s largest asset manager with almost $10 trillion in AUM, is set to launch a new metaverse ETF to help investors securely monetize on the booming immersive version of the internet.

Digital Assets

Binance wins license in New Zealand as rival Huobi shutters derivatives

Binance, the world’s largest crypto exchange by traded volume, has obtained licenses to operate in New Zealand, even after rival Huobi shutdown derivatives trading last month due to concerns about regulations.

Retail FX

Hong Kong busts perpetrators of ‘ramp and dump’ scam

Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), has charged thirteen suspects of market manipulation in a joint operation with the local police.

Institutional FX

TradingView integrates market data from German Tradegate exchange

TradingView announced that it ‎has increased data coverage to allow its users to receive information from ‎and get free access to the intra-day and tick data from Tradegate Exchange.

Retail FX

Spotware Systems introduces Custom Push Notifications for cTrader mobile apps

Spotware Systems, a technology provider for the electronic trading industry, is introducing a new push notification feature to alert mobile users of price swings and market fluctuations through their cTrader app.

Market News

The Week Ahead: 30 September from David Madden, Market Analyst at Equiti Group

Sterling dominated the headlines last week, as there were concerns the UK government might struggle to service its debt.

Inside View

How does the quality of signal providers affect your business?

A must-have onboarding process for brokers with investment services like PAMM, MAM, or copy trading

Technology

DBS deploys Nasdaq Trade Surveillance

“The confidence that markets and our clients have in DBS as a safe and trusted banking group is anchored on our ability to detect and respond to anomalous activity, which in turn calls for a robust surveillance and prevention infrastructure.”

Industry News

SEC charges Justin Costello and David Ferraro for securities fraud and posing as billionaire veteran

The Securities and Exchange Commission charged Cannabis executive Justin Costello and David Ferraro, an associate of Costello’s, for promoting the stock of several microcap companies on social media without disclosing their own simultaneous stock sales as market prices rose.

<