The Commodity Futures Trading Commission (CFTC) has charged an Oregon resident and his company for illegally collecting $2.1 million from 21 individuals in an alleged forex fraud.
According to a statement posted on the CFTC’s website, Erik J. Hass had solicited U.S. residents to trade foreign currency (forex) contracts as well as other assets through a commodity pool operated by his company Simply Gains Inc. He allegedly enticed customers to fund his forex pool in a supposedly high-returning foreign exchange trading scheme.
Rather than trade, Hass used at least $415,000 of the funds for personal expenses, including mortgage, credit card debt, and a Caribbean cruise, and to make Ponzi-type payments to other pool participants.
Hass also failed to register with the CFTC as required, and fraudulently sought participants by lying about the company’s market position and investment track record. The defendants falsely promised, among other things, that depositors could not lose more than 20% of the funds they deposited. In fact, Hass lost over $1 million trading forex.
Right now, the CFTC is aiming for civil monetary penalties, restitution, and permanent bans on registration and trading against the defendants.
CFTC flexes muscles against FX firms
Separately, Hass has been indicted by a federal grand jury in Oregon for five counts of wire fraud, two counts of mail fraud, and one count of money laundering. He could face a maximum sentence of 30 years in a federal prison if convicted of all charges.
The CFTC has been active recently as US regulators continue their cleanup of the forex space, this time with charges of fraud being brought against a dozen of brokers and trading apps. Just this morning, the agency has filed its case against Silver Star FX and its COO, asserting that David Wayne Mayer was only interested in running a fraudulent scheme.
The users of their auto-trading app were given false account histories showing trading returns that didn’t exist, and provided false information about executives’ experience and expertise in trading, the watchdog said.
Earlier this week, the CFTC also fined Gain UK a $250,000 civil penalty for illegally signing up US investors to its FX trading platform. The London-based arm of the largest retail FX broker in the United States was also ordered to disgorge $241,671 as one of its agents referred US clients despite never having been registered with the commission.