Texas Man Sued by CFTC Over Alleged Foreign Currency Fraud
The Commodity Futures Trading Commission is suing Texas resident Christopher Cornett for alleged solicitation fraud, issuing false account statements, misappropriation of participants’ funds, and not registering in connection with an off-exchange foreign currency fraud. The CFTC filed its complaint on February 2 in the U.S. District Court for the Western District of Texas.
The CFTC contends that between June 2008 through October 2011, the Texas resident approached prospective clients to try to get them to put money in a pooled investment in forex. He played the role of operator and manager of the pool that was referred to with different names, including ICM, ITLDU, IFM, LLC, and International Forex Management, LLC. Cornett is accused of falsely soliciting these prospective participants and making false claims to them that he never had a losing month or year while engaging in forex trading.
Cornett was allegedly able to solicit about $7.07 million between June 2008 and September 2010. Pool participants were able to redeem about $1.64 million. Meantime, he lost about $4.17 million of the funds’ money. During this period of over two years, Cornett allegedly had only one month that was profitable while engaged in forex trading with the pool funds. He is also accused of misappropriating about $1.26 million and falsely reporting the pool’s profits, account balances, and losses to participants.
The CFTC says that between October 2010 and October 2011, the Texas resident allegedly was able to solicit another $6.95 million from those participating in the pool and that the latter were only able to redeem about $2.22 million. Cornett also is accused of transferring about $1.81 million of the money to accounts at three foreign firms while losing everything except for about $1,600 in forex trading. Cornett also allegedly moved about $1.56 million of the funds to another three foreign firms. Even though he was required to register as a commodity pool operator, Cornett didn’t yet still acted in that role. The CFTC wants disgorgement, restitution, civil monetary penalties, a permanent injunction, and registration and trading bans against him.
Forex Fraud
The CFTC is in charge of investigating allegations of foreign currency trading fraud. It is also supposed to take action to shut such scams down. Forex fraud can be perpetuated by financial firms and affiliates, as well as by unregulated firms.
Signs of a possible forex currency trading scheme (from the CFTC):
• It sounds too good to be true
• Claims of a “get rich quick” investment
• Guarantees that your investment will definitely result in profits
• The downplaying of risks involved
• Margin trading or interbank market trading
• Having to send or transfer money by mail or online
• Ethnic communities are targeted as possible clients
• Challenges in getting the company’s performance or background records
Our Texas securities fraud lawyers represent victims of all types of financial fraud scams.
CFTC Charges Texas Resident Christopher B. Cornett in Foreign Currency Fraud Action, CFTC, February 8, 2012
Read the Complaint (PDF)
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