CFTC Charges Principal of a Purported Commodity Trading Firm with Social Media Based Fraudulent Scheme

This post was originally published on this site

February 14, 2019

— The Commodity Futures Trading Commission (CFTC) today announced that a federal court in a CFTC enforcement action entered a preliminary injunction prohibiting defendant Kelvin O. Ramirez (Ramirez), of Houston, Texas from engaging in fraud, misappropriation of customer funds, and regulatory violations in connection with an off-exchange foreign currency (forex) scheme.  The CFTC’s complaint charges that Ramirez defrauded more than 140 clients by falsely claiming he had millions of dollars in assets under management when he did not and there is no evidence of him trading.  Instead, as alleged, he absconded with his clients’ money.

James McDonald, CFTC’s Director of Enforcement, said “This case shows the CFTC’s continued commitment to rooting out fraud in our markets, whether it flows through traditional avenues or new ones, like the social-media based scheme alleged here. As social media becomes more prevalent, we caution customers to perform appropriate due diligence regarding any investment solicitations they receive over those platforms.” 

The preliminary injunction order, issued on January 29, also continued a freeze of Ramirez’s assets and preservation of records ordered by the court on January 15.

Specifically, the CFTC Complaint, filed on January 14, in the U.S. District Court for the Southern District of Texas, alleges that from as early as 2015 to the present, Ramirez  defrauded more than 140 people by fraudulently soliciting them to (1) invest in commodity pools that purportedly trade in forex, (2) trade forex through accounts managed by Ramirez, and (3) subscribe to his  forex trading education and signals service, then misappropriating the funds provided to him for these purposes.  Ramirez allegedly lured his clients primarily through social media — including Instagram, WhatsApp, and similar platforms. Among other alleged misrepresentations, Ramirez’s solicitations touted his hundreds of thousands of dollars in weekly forex trading profits; a lavish lifestyle funded through his profits; his growing multi-million dollar personal bank balance; and a managed forex trading pool with millions of dollars in assets under management. Ramirez’s solicitations allegedly promised his clients return of their principal plus extravagant profits paid periodically during the investment term with virtually no warning of the risk associated with trading. As alleged, all of these representations were false, and Ramirez essentially stole his clients’ money. 

Also as alleged in the Complaint, in operating his fraudulent business, Ramirez was required but failed to register as a Commodity Pool Operator and Commodity Trading Advisor and committed other related regulatory violations.

In its continuing litigation against Ramirez, the CFTC seeks restitution to defrauded clients, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations of federal commodities laws, as charged.

The CFTC thanks and acknowledges the assistance of the St. Vincent and the Grenadines Financial Services Authority.

CFTC Division of Enforcement staff members responsible for this case are Daniel Jordan, Diana Dietrich, Michael Loconte, Erica Bodin and Rick Glaser.

* * * * * * *

CFTC’s Foreign Currency (Forex) Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency Trading (Forex) Fraud Advisory, which states that the CFTC has witnessed a sharp rise in Forex trading scams in recent years and helps customers identify this potential fraud.