US CFTC charges Forex Ponzi scheme operators

Derek Springfield and Draven have fraudulently gained $1.46 million from 86 individuals. The US CFTC files lawsuit against Ponzi scheme operators, seeking compensation to defrauded clients. How was the scheme operated?

21 December, AtoZForex – The US Commodity Futures Trading Commission (CFTC) has reported that it filed a civil anti-fraud enforcement action in the US District Court for the District of Arizona against Derek Springfield and his company Draven, LLC (Draven). The regulator took an enforcement action against the wrongdoers as the individual and his firm provided misleading account statements to commodity pool participants, engaged in deceptive sales practices and misappropriated funds of pool participants.

Ponzi scheme operators' activities 

According to the CFTC, Derek Springfield and Draven fraudulently solicited and obtained around $1.46 million from 86 individuals beginning from July 2014 and until now. These fraudulently gained funds are connected to the pooled investments in commodity futures and Forex. During this entire period, Mr. Springfield’s company Draven was not registered as a Commodity Pool Operator (CPO). Nor Derek Springfield was registered with the regulator as an Associated Person of a CPO.

The complaint of the regulator states that the defendants solicited potential pool participants to invest with Draven. The investors were told that their money would be placed in segregated accounts and traded on their behalf by "institutional quality traders with extensive generating returns on the Futures, Forex, and Options markets".

However, the offenders misappropriated some funds of pool participants. Instead of trading funds of pool participants, this money was used to pay for Draven's corporate expenses and for Mr. Springfield’s personal expenses. Further, the complaint mentions that defendants placed funds into two separate commodity pools and traded only a small percentage of the funds.

Defendants masked losses

In addition, Derek Springfield executed trading through one or more trading accounts, maintained in his name at various registered Futures Commission Merchants and Retail Foreign Exchange Dealers. The offender didn’t succeed in trading. But he incurred significant losses in the trading accounts he traded on behalf of pool participants. In order to hide these losses and the misappropriation of funds, the offenders sent deceptive statements to the pool participants. To keep the funds Springfield and Draven operated a Ponzi-scheme. They used the funds of pool participants to pay returns to other pool participants who requested withdrawals from their accounts.

Therefore, the CFTC seeks compensation to defrauded clients, disgorgement of ill-gotten gains and a civil monetary penalty. The regulator also seeks permanent registration and trading bans, and a permanent injunction against future violations of federal commodities laws and regulations.

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