CFTC charges Texas resident and six US and Costa Rican companies with engaging in two fraudulent schemes totaling $6 million

NEWS
Published
Sep 14th '21
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The Commodity Futures Trading Commission (CFTC) has announced the filing of an enforcement action in the U.S. District Court for the Northern District of Texas, charging defendants Rudy Avila and six U.S. and Costa Rican companies with fraudulent solicitation to trade in commodity futures, options on commodity futures, and retail off-exchange foreign currency (derivatives and forex), misappropriation of funds, and issuing false statements.

 

The six companies charged are The L.I.F.T. Group LLC (LIFT), CIG Internacional Sociedad Anónima ( CIG) and Trading Technologies Group Sociedad Anónima (TTG) organized in Costa Rica, Trading Ventures Group, LLC (TVG), Capital Ventures Group, LLC (CVG), and Ventures Group, LLC (VGL.). The complaint also charges CIG and TVG with failure to register as Commodity Trading Advisors (CTA).

 

In the litigation against the defendants, the CFTC seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations.

 

Case Background

As alleged in the complaint, since at least 2017 and continuing through at least spring of 2020, Avila, LIFT, CIG and TTG, acting through their officers, employees, or agents, engaged in a scheme and artifice to defraud by fraudulently soliciting and obtaining at least $4.2 million from at least 170 CIG clients for the purported purpose of trading derivatives and forex.

 

The complaint further alleges that in a second scheme, since at least 2019 and continuing to the present, Avila, TVG, CVG and VGL, acting through their officers, employees or agents, engaged in another scheme and artifice to defraud by fraudulently soliciting and obtaining at least $1.8 million from at least 55 TVG clients also for the purported purpose of trading derivatives and forex.

 

According to the complaint, instead of trading client funds as promised, the defendants obtained and misappropriated funds from CIG and TVG clients by making false material representations and promises and by concealing material information from CIG and TVG clients. For example, the defendants falsely represented and promised their clients that they would use their discretion to trade their funds in derivatives and forex with guaranteed profits. The defendants failed to disclose they were not trading as promised and instead were misappropriating their funds. In the manner of a Ponzi scheme, the defendants used certain client funds to make payments to other CIG and TVG clients. The defendants also provided clients with access to fake trading statements that reflected fictitious trading gains and losses and, in the case of CIG and TVG, represented to their clients that they would manage their client accounts and use their discretion to trade their funds without registering as CTAs as required.

 

As alleged, the defendants never traded derivatives and forex on behalf of their clients and, instead, stole most of their clients’ investments. In total, CIG clients lost a total of $3.58 million and TVG clients lost a total of at least $1.773 million.

 

Separate, Parallel Criminal Action

In U.S. v. Avila, 3:21-cr-00168-M-1 (BML), a parallel criminal case in the U.S. Court for the Northern District of Texas, Avila pled guilty to one count of wire fraud in violation of 18 U.S.C. § 1343.

 

The CFTC thanks the Office of the United States Attorney for the Northern District of Texas, the FBI Dallas/Fort Worth Office, the UK Financial Conduct Authority, and the Financial Services Regulation and Supervision Department of Nevis.

 

The Division of Enforcement staff members responsible for this case are Xavier Romeu-Matta, Michael Cazakoff, Judith M. Slowly, Steven I. Ringer, Lenel Hickson, Jr., and Manal M. Sultan.

 

Source: CFTC

 

CFTC’s Foreign Currency (Forex) Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency (Forex) Trading Fraud Advisory, to help customers identify this sort of scam.

 

The CFTC also strongly urges the public to verify a company’s registration with the Commission before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.

 

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online or contact the CFTC Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.