NY Court orders binary options, Bitcoin fraudsters to pay monetary penalty of $1.5 million

Maria Nikolova

Dillon Michael Dean and The Entrepreneurs Headquarters Limited also have to pay $432,184 in restitution.

Judge Sandra J Feuerstein of the New York Eastern District Court has signed an order against the defendants in a fraud case launched by the Commodity Futures Trading Commission (CFTC) in January this year.

The defendants – Dillon Michael Dean and The Entrepreneurs Headquarters Limited (TEH), are accused of running a binary options and Bitcoin scam in the United States.

TEH is an England and Wales company, incorporated on or about April 24, 2017. TEH has never been registered with the Commission in any capacity. Dean is the sole founder of TEH and, from April 2017 through January 18, 2018, was the sole principal, director, and officer of TEH. Dean’s last known residence is in Longmont, Colorado.

In or around April 2017, Dean began soliciting investments in a multi-level marketing scheme, which he referred to on his website as “The Entrepreneurs Headquarters,” or “TEH”. Dean stated that he was the owner of TEH, claiming that he had “traded options” for seven years, and had “strong skills in options trading,” among other areas. All of the representations about the defendants’ trading expertise and intention to generate profits for customers by trading binary options were knowingly false. The defendants also made numerous representations to customers about their supposed trading profits.

The defendants only accepted investor deposits in Bitcoin. The defendants instructed customers to set up personal account pages at the TEH website (referred to by Defendants and customers as their “back office”) and follow the instructions there to transfer Bitcoin to TEH from the customers’ own cryptocurrency wallets.

On August 9, 2017, TEH posted an announcement on its Facebook page about its website being hacked. There had been no hack of the TEH website, the CFTC notes, and the defendants knew, or recklessly disregarded the fact, that at the time they made each of these statements about the supposed hack the statements were false. When customers asked Defendants for the return of their funds, their requests were ignored.

At least 127 customers of TEH have had their principal investments, totaling at least $499,264.04, misappropriated by the defendants.

Meanwhile, Dean and other representatives of TEH launched another purported trading venture, Real Trade Profits (RTP), which solicited new customers in a manner very similar to TEH: seeking investments in Bitcoin for a pooled investment, professing expertise and consistent results in binary options trading, and promising high rates of return. As of December 4, 2017, RTP purported to have 65 members.

The Court orders that, as a result of the defendants’ violations of the Commodity Exchange Act (CEA) and Commission Regulations, Dean and TEH will have to pay, jointly and severally, restitution in the amount of $432,184.79, plus post-judgment interest. To effect payment of the Restitution Obligation and the distribution o f any restitution payments to Defendants’ customers, the Court appoints the National Futures Association (NFA) as Monitor.

Each customer of the defendants who suffered a loss is explicitly made an intended third-party beneficiary of this Order and may seek to enforce obedience of this Order to obtain satisfaction of any portion of the restitution that has not been paid by Defendants to ensure continued compliance with any provision of this Order and to hold Defendants in contempt for any violations of any provision of this Order.

Dean and TEH shall, jointly and severally, pay a civil monetary penalty in the amount of $1,497,792. The size of the penalty is in line with that requested by the CFTC in June this year.

Neither defendant has appeared in the case personally or through a representative, and despite service on defendants of numerous court papers, and multiple other attempts by the Commission to contact the defendants, the regulator has not received any response to this lawsuit or communication of any kind from Dean and his company.

As FinanceFeeds has reported, Dillon Michael Dean and TEH have been out of reach. There had been visits to Dean’s addresses in Colorado, emails and phone messages, as well as calls. The regulator even resorted to a skip trace performed on March 15, 2018, using CLEAR, an online investigative platform commonly utilized by law enforcement agencies and operated by Thomson Reuters. But it revealed no further address, email, or telephone information for Dean.

A Deputy with the Boulder County Sheriff’s Office has spoken with a woman who identified herself as Christina Kielnecker who stated that Dean no longer lived at the residence. She stated that “he packed up and moved his belongings out of the residence, after all the stuff started coming down.”

The case is now closed.

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