The Commodity Futures Trading Commission has filed suit against Cash FX Group, its CEO Huascar Jose Lopez Castillo of Brazil, The Conversion Pros and its CEO Ronald Pope of Oregon, and Justin Halladay of Florida in connection with an alleged $950 million investment fraud scheme.
The complaint was filed Friday in the US District Court for the Middle District of Florida. According to the CFTC, the defendants operated a multilevel marketing Ponzi scheme, soliciting and accepting over $950 million purportedly for trading retail foreign currency contracts in a commodity pool.
Allegations of Fraud
The CFTC alleged that defendants falsely claimed pool funds would be managed by expert traders, proprietary algorithms, and artificial intelligence, while promising participants returns of up to 15% weekly.
The agency contends that Cash FX engaged in minimal actual forex trading and misappropriated most participant funds. According to the complaint, the defendants used new contributions from participants to pay fictitious trading profits while directing millions of dollars to themselves.
Cash FX also allegedly provided false accounting statements to participants. The CFTC stated that participants lost at least $406 million through the scheme.
Enforcement Action
David I. Miller, Director of Enforcement at the CFTC, said in a statement: "The Division of Enforcement has continued to refocus on its core mission of protecting the public from fraud and manipulation. This critical action, and the massive fraud it targets, reflects our steadfast commitment to addressing fraud wherever we find it."
