Court threatens fines on binary options fraudsters for non-compliance with orders
According to the Nevada District Court, the CFTC has established by clear and convincing evidence that David Gilbert Saffron and Circle Society have violated multiple terms and conditions of the injunction order.
The United States Commodity Futures Trading Commission (CFTC) is pressing ahead with its action against David Gilbert Saffron and Circle Society, accused of fraudulent solicitation, misappropriation, and registration violations relating to an $11 million binary options scheme.
The latest filings with the Nevada District Court show that the Court has threatened fines on the defendants in this case.
In particular, Saffron appeared at the show-cause hearing and offered excuses and promises, but he failed to show cause why he and Circle Society should not be held in civil contempt for violating the injunction order and subject to further coercive sanctions if they did not soon comply. The Court found that the CFTC has established by clear and convincing evidence that Saffron and Circle Society have violated multiple terms and conditions of the injunction order and that the CFTC is entitled to relief in the form of coercive sanctions against each defendant.
The Court has ordered that, no later than February 7, 2020, the defendants have to make available to the CFTC, for inspection and reproduction, all of their business and financial books, records, and other documents, including electronically-stored information (ESI).
Also, no later than February 7, 2020, the defendants have 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.
Unless Saffron purges his contempt by fully complying with the terms and conditions of the Order and the preliminary injunction order, he must pay to the District Court a daily compliance fine of $1,000 per day, beginning on February 8, 2020, and lasting until such time as Saffron has purged his contempt or the court orders otherwise.
Unless Circle Society purges its contempt by fully complying with the terms and conditions of the orders, it must pay to the District Court a daily compliance fine of $1,000 per day, beginning on February 8, 2020, and lasting until such time as Circle Society has purged its contempt or the court orders otherwise.
On January 31, 2020, the CFTC filed a motion for fees and expenses. The regulator states it incurred significant fees and expenses in demanding compliance with the temporary restraining order and preliminary injunction order, collecting evidence of the violations, preparing show-cause motions, and participating in three hearings before the Court. That is why, the regulator requests fees and expenses totaling $14,279.30.
According to the CFTC, the amount of fees and expenses is reasonable and justified in light of “the defendants’ continuing disobedience of this Court’s lawful orders, which have made discovering the full extent of the defendants’ fraud more difficult and ultimately more expensive and time consuming for the plaintiff”.
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.