Forex fraud: Individual and his company to pay over a million dollar penalty
The Commodity Futures Trading Commission (CFTC) has issued an announcement to inform that the U.S. District Court for the Eastern District of Missouri entered an order of default judgment finding that Joshua Christian McDonald and his company, Perfection PR Firm LLC (PPR), committed fraud, misappropriated customer funds, and operated without proper registration. The defendants operated out of California and Tennessee.
The court’s June 9, 2020 order requires the defendants to pay $360,565 in restitution to defrauded customers and a civil monetary penalty of $935,907. Additionally, the order permanently enjoins the defendants from engaging in conduct that violates the Commodity Exchange Act, from registering with the CFTC, and from trading in any CFTC-regulated markets.
The order resolves a CFTC enforcement case filed on February 14, 2020, charging the defendants with fraud and misappropriation related to an off-exchange foreign currency (forex) trading scheme in which they solicited funds totaling at least $440,000 from at least 12 customers, including multiple residents of Missouri. [See CFTC Press Release No. 8119-20] The CFTC charged that, in soliciting funds for and operating a pooled investment vehicle, PPR acted as an unregistered commodity pool operator and McDonald acted as an unregistered Associated Person of PPR. The defendants falsely represented to prospective customers that McDonald was profitably trading forex and promised customers that their accounts would grow in value 10 to 50 percent per month, among other things. In fact, McDonald did not trade forex as successfully as he claimed and actually lost money. Moreover, the defendants misappropriated customers’ funds by transferring funds into cryptocurrency accounts in McDonald’s name, paying McDonald’s personal expenses, and failing to return funds upon customers’ requests. Customers lost most or all of their funds as a result of the defendants’ fraud and misappropriation.