Court allows CFTC to effect service on uncontactable binary options scammer by publication
The approval was secured shortly after the CFTC admitted it cannot locate Peter Szatmari, who is accused of having operated a large-scale binary options fraud scheme.
Less than a fortnight after the United States Commodity Futures Trading Commission (CFTC) admitted that it cannot locate a binary options scammer who defrauded victims of $3.8 million, the Court has allowed the regulator to effect service on the fraudster via alternative means.
Let’s recall that, on November 25, 2019, the CFTC moved the Hawaii District Court for an order authorizing the regulator to serve Peter Szatmari by publishing notice in the Hawaii Star Advisor. Despite its diligent efforts, the Commission said, it has been unable to locate and serve Szatmari.
On October 7, 2019, the CFTC filed a five-count Complaint against Szatmari, alleging serious violations of the Commodity Exchange Act and Commission Regulations.
Before filing the Complaint, the CFTC engaged in settlement discussions with Szatmari and reached an agreement in principle. However, before executing the settlement documents, Szatmari backed out of the settlement, his attorney advised the Commission that he no longer represented Szatmari and Szatmari disappeared.
When the CFTC asked Szatmari’s attorney for Szatmari’s contact information, he provided a P.O. Box in Kahului, Hawaii, and responded,
“Mr. Szatmari has instructed me that he does not want me to supply you with any additional information.”
Now, the Hawaii District Court has granted the CFTC’s Application for Order to Serve Defendant Peter Szatmari by Publication.
As alleged in the complaint, Szatmari lured prospective customers by disseminating fraudulent marketing materials in six marketing “campaigns.” These solicitations instructed unsuspecting investors to open and fund binary options accounts with “recommended” brokers to get free access to automated trading software that purported to generate astronomical profits with no risk of loss. According to the filings, these marketing materials included numerous false or misleading statements.
Szatmari also failed to disclose that he received a fee from the binary options brokers he recommended every time a new account was opened and funded as a result of his solicitations. Further, he failed to disclose that this fee arrangement was the sole basis for recommending brokers. Szatmari’s fraudulent solicitations were disseminated to and/or viewed by millions of prospective customers, with approximately 25,000 customers opening binary options trading accounts and funding those accounts, usually with an initial deposit of $250 or more.
The CFTC seeks full restitution to defrauded individuals, disgorgement of ill-gotten gains, a civil monetary penalty, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations.