US Court orders futures fraudster to pay more than $1.9m

The United States Commodity Futures Trading Commission (CFTC) has secured a win in a civil action against Gregory L. Gramalegui of Vail, Colorado, d/b/a Emini Trading School, the US regulator announced today.

A Colorado federal court has recently entered final judgment ordering Gramalegui, ordering the defendant to pay more than $1.9 million in civil monetary penalties and disgorgement. The Court ordered the defendant to pay a $1,442,070.51 civil monetary penalty and to disgorge $480,690.17 in ill-gotten gains. The Court also imposed permanent trading and registration bans on Gramalegui and permanently enjoined him from further violations of the CEA and CFTC Regulations, as charged.

The CFTC has alleged that Gramalegui fraudulently solicited customers in connection with the offering of a futures trading system and an advisory service. He is also alleged to have made false statements to the CFTC, and to have violated a prior CFTC order against him.

In his Opinion in this case, Judge Robert E. Blackburn of the U.S. District Court for the District of Colorado found that Gramalegui had engaged in a years-long scheme to fraudulently market and sell a futures trading system that did not work and an advisory service that did not deliver as promised and, in doing so, Gramalegui failed to provide required advertising disclosures to clients and prospective clients.

Furthermore, the Court found that Gramalegui’s unlawful activity violated a prior CFTC Order entered against him in 2001 based on his marketing of a previous deceptive trading system and advisory service. Back then, the CFTC issued an order finding that Gramalegui, who was doing business as S&P Safe Co., repeatedly used a false advertisement in marketing his commodity trading system called the Trend Reflection Trading System.

Specifically, the CFTC order from 2001 finds that from July 1998 to June 1999, Gramalegui, through advertisements in futures industry magazines, made false claims that his mother traded the Trend System, and implied that she had personally traded profitably. However, as the order notes, his mother did not personally trade with the system. The order clarified that Gramalegui made commodity trades in an account in his mother’s name, and contrary to the claims made by Gramalegui, the account had net losses. Gramalegui’s solicitations of the Trend System operated as a fraud or deceit upon customers, in violation of the Commodity Exchange Act (CEA).

The CFTC warns that orders requiring repayment of funds to victims may not lead to the recovery of any money lost because the wrongdoers may not have sufficient funds or assets.