The U.S. Commodity Futures Trading Commission (CFTC) announced that it obtained orders imposing more than US$2.9 mln in sanctions against Foreign Fund and some other defendants, including two individuals and a Tennessee Corporation, for violations of the anti-fraud provisions of the Commodity Exchange Act. The CFTC action alleged that Foreign Fund, which was an Internet entity operating exclusively from a website in Ukraine and maintaining bank accounts in Nashville, Tennessee (U.S.), defrauded thousands of customers worldwide out of more than US$3 mln, by offering illegal off-exchange futures contracts. Two defendants were charged with misappropriation in connection with their handling of customer funds.
Relief defendants, – British Virgin Islands company Star Connection Inc. and Deana Whitely of Olds, Alberta, – were ordered to turn over more than US$658,000 and US$245,424.24 of ill-gotten foreign fund customer money, in Foreign Fund customer funds to which they were not entitled.
The Commission also issued orders that bar Foreign Fund and other defendants from any activities bringing profit. One of them, MW First Trustees Inc., was deprived of all funds and assets that were in its custody. The Commission orders also require Foreign Fund to pay restitution in the amount of US$1,216,463 and a $1,216,463 civil monetary penalty.
Foreign Fund attracted customers by falsely representing that it was generating monthly profits of up to 100% through foreign currency futures trading, whereas in reality it engaged in a Ponzi scheme, using funds from new customers to pay previous customers, and misappropriating other customer funds.