Three associated Forex investment firms and their principals are in hot water with the US derivatives regulator and stand accused of operating like a Ponzi scheme.
The Commodity Futures Trading Commission (CFTC) said John D. Black and his affiliated entities Financial Tree, Financial Solution Group, and New Money Advisors, as well as his associates Christopher Mancuso and Joseph Tufo, set up and ran a fraudulent trading business from June 2015 up until now.
Through these brands, Black and his co-conspirators offered binary options and retail Forex Trading and are alleged to have fleeced investors for $14.5 million. Out of this figure, they used more than $11 million to send funds back to early investors and for personal spending on exotic vacations, home renovations, limousine expenses, spa and haircare expenses, online gambling, and expenses relating to divorce and spousal support.
The defendants allegedly concealed their fraud by issuing false account statements to the pool participants. The CFTC also named seven more relief defendants, who are alleged to have received victims' funds and will be asked to return them if the case is successful.
While the pyramid operators lived the good life with the money, they made phony excuses to investors for their failure to return funds and deliver promised profits. Over time, these excuses have grown more outlandish—including, for example, that “Europeans’ summer vacations delayed return of funds and that storms in the Bahamas had delayed transaction processing,” the agency said.
Most of the pool money was lost, according to the complaint that accuses the defendants of fraud, misappropriation, registration violations and issuing false statements. However, the CFTC is seeking to retrieve the funds contributed to the scheme, alongside assets that relief defendants received from defendant to which they have no legitimate claim.
A relief defendant is a person or entity who has received funds or assets as a result of the illegal acts of the other named defendants. A relief defendant is typically named because the plaintiff seeks injunctive relief to protect the sought funds or assets and apply them to any eventual recovery in the case.
The CFTC seeks penalties and permanent registration and trading bans. The agency hopes to return invested funds to victims, though it said it cannot guarantee the full value can be obtained from the fraud operatives.
