CFTC wins $29 million case against FX scam Financial Tree
The U.S. District Court for the Eastern District of California has agreed with the CFTC over claims of fraud against John D. Black, Christopher Mancuso and Joseph Tufo, and related Forex and binary options scams, as well as Colorado-based attorney John P. Glenn.
The court found that the defendants used Black’s affiliated entities Financial Tree, Financial Solution Group, and New Money Advisors, to solicit investors to contribute funds to fraudulent binary options and forex commodity pools.
Defendants were found to have misappropriated millions of dollars of those funds for personal use, made Ponzi payments to existing pool participants with new pool participants’ funds, and made false statements to explain their failure to return funds and deliver promised profits.
The order finds they are liable for solicitation fraud in connection with binary options and retail foreign currency (forex) transactions, fraud by commodity pool operators (CPOs) and associated persons (APs), multiple CFTC registration violations, and failure to comply with CPO regulations.
The scam took place between June 15, 2015 to June 15, 2020, according to the CFTC investigation.
The court ordered defendants Black, Financial Tree, Financial Solution, New Money, Mancuso, Glenn, and Glenn’s law firm to pay nearly $10.5 million in restitution jointly and severally.
The order further imposes civil monetary penalties of approximately $5.4 million on Black, Financial Tree, Financial Solution, and New Money; $12.1 million on Mancuso.
Joseph Tufo is ordered to pay over $4.5 million of that restitution jointly and severally with the other defendants, and $680,000 in penalties. Attorney John P. Glenn and his law firm is ordered to pay $850,000 in penalties.
Seven relief defendants will also disgorge over $2.6 million they received from the scheme to which they have no lawful entitlement, the court ordered.
In August 2021, the financial watchdog brought charges against Glenn totaling over $26,500,000: one seeking restitution ($9,403,279.13); one seeking disgorgement ($285,438.24); and one seeking civil monetary penalties ($16,857,022).
Glenn filed a voluntary Chapter 13 petition with the Bankruptcy Court for the District of Colorado on January 6, 2021.
Financial Tree was found to have operated as a Ponzi scheme for years, trading only a small portion of the money taken in and misappropriated the rest – concealing that misappropriation through Ponzi payments, false accounts statements, and other material misrepresentations and omissions to victims of the Financial Tree Fraud.
The CFTC reminded the public that whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.