FX con man blew client money on luxury lifestyle
Floridian FX fraudsters misappropriated tens of millions of dollars of client money, squandering it on a luxury lifestyle
Once again, North America’s electronic trading industry regulatory authorities show their mettle in bringing a nefarious FX company operator to book after he bilked his customers out of $75 million collectively, creating losses for customers and misappropriating client funds in order to subsidize a lavish and flamboyant lifestyle.
The Commodity Futures Trading Commission (CFTC) filed a civil enforcement action in federal court in Florida against Sarasota area defendants Oasis International Group, Limited (OIG), Oasis Management, LLC (OM), Satellite Holdings Company (Satellite), Michael J. DaCorta (DaCorta), Joseph S. Anile, II (Anile), Raymond P. Montie, III (Montie), Francisco “Frank” L. Duran (Duran), and John J. Haas (Haas) (collectively, defendants) in order to dispatch this particular scheme and dispense justice for its victims.
The defendants are charged with operating a $75 million FX) trading scheme involving over 700 U.S. participants and over $47 million misappropriated in order to return funds to certain participants and for personal use, such as exotic vacations, sports tickets, and college tuition.
One can assume that the college tuition fees were not for the purposes of the education of these individuals, as their activities were far from intelligent.
The CFTC’s complaint against the fraudsters alleges that starting in 2011, the operators of the scheme fraudulently solicited and misappropriated money from over 700 U.S. residents for pooled investments in retail forex.
Between mid-April 2014 and the present, the defendants received approximately $75 million from pool participants for investment in two commodity pools—Oasis Global FX, Limited and Oasis Global FX, SA (collectively, the “Oasis Pools”)—that would purportedly trade in forex. The defendants concealed their fraud by issuing false account statements to the pool participants. The Complaint also names nine relief defendants, who are alleged to have received pool participant funds.
Jumping to action, the authorities entered a restraining order freezing the assets of the defendants and the relief defendants and permitting the CFTC to inspect all relevant records of the purpetrators of the scheme, this having taken place on April 15 and implemented by the Honorable Virginia Covington, U.S. District Court Judge for the Middle District of Florida. The Court also appointed Burton W. Wiand as a temporary receiver to take control of the corporate defendants and relief defendants, as well as the assets of the individual defendants.
CFTC Director of Enforcement James McDonald commented, “This action is among the latest examples of the CFTC’s coordination with other regulators and criminal authorities to aggressively and assertively root out fraud and bad actors involved in our markets. We will continue to hold accountable not just companies, but also individual wrongdoers.”
In terms of background, the CFTC alleges that in order to entice pool participants, the defendants falsely represented that, among other things, pool participants would receive a minimum 12% guaranteed annual return; the Oasis Pools had never had a losing month; there was no risk of loss with the Oasis Pools; and forex trading returns for the Oasis Pools were 22% in 2017 and 21% in 2018. The defendants misappropriated the majority of pool funds and lost the remainder trading forex.
As further alleged, of the approximately $75 million the defendants received from pool participants between mid-April 2014 and the present, the defendants deposited only $21 million into Oasis Pools’ forex trading accounts and lost all of those funds trading.
The defendants used over $28 million to make Ponzi-like payments to other pool participants, as well as spending over $18 million for unauthorized personal or business expenses such as real estate purchases in Florida, exotic vacations, sports tickets, pet supplies, loans to family members, and college and study abroad tuition.
The defendants also allegedly created and issued false account statements to conceal their trading losses and misappropriation from pool participants by inflating and misrepresenting the value of the pool participants’ investments in the Oasis Pools and the Oasis Pools’ trading returns.
In its continuing litigation against the defendants, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act, and CFTC Regulations, as charged.
The CFTC acknowledges and appreciates the cooperation and assistance of the Florida Office of Financial Regulation; the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigation Division; the U.S. Attorney’s Office for the Middle District of Florida; and the Cayman Islands Monetary Authority.
Whilst this type of Ponzi-esque behavior is relatively rare, it is clear that it is still existential, this particular case being reminiscent of a scheme operated by a young man on the other side of the Atlantic named Alex Hope in which a substantial amount of money was stolen from investors who wrongly thought they were investing in a managed FX scheme, when in fact it was funding a lifestyle of casinos and sports cars.
Thankfully, the authorities are on the ball once again and in the case of the US, many will likely receive a proportion of their losses back if restitution efforts are successful.