On Tuesday, a US judge issued a $2.2 million fine against Alcibiades Cifuentes and Jennifer Cifuentes for running a fraudulent FX trading scam.
Judge Esther Salas of the US District Court in New Jersey has entered an order of default judgment and permanent injunction against the Cifuentes’, both of West New York, New Jersey, and their corporate entity, Cifuentes Fund Management.
The order, entered on April 20, 2018, finds that from at least April 2013 through March 2015, the defendants devised a sham commodity pool trading in off-exchange FX contracts.
To solicit pool participants to transfer funds to them, the defendants made false statements, fabricated account documents, and established a practice, or “demo,” FX trading account that involved no actual funds and posed no risk of loss.
The defendants posted “profitable” trades from the demo account online and falsely represented them to be their actual trades, without disclosing that the demo account had sustained “losses” exceeding $5 million.
The court determined that the “defendants knowingly stole all of the money entrusted to them by spending it on themselves or passing it to other victims, often within a day of the funds clearing their accounts.”
According to the order, the Cifuentes misappropriated pool participants’ funds by purchasing luxury vehicles, jewelry, and clothing for themselves. They also used pool participants’ funds to make Ponzi scheme-like payments to other victims.
The order requires the pair to pay, on a joint and several basis, $457,120 in restitution to pool participants, as well as a civil monetary penalty of $1,770,000, plus post-judgment interest on both amounts.
As a result of the “intentional and egregious nature of the defendants’ fraudulent conduct,” the Order also permanently bans the them from the markets the CFTC regulates, and permanently enjoins them from future violations of the Commodity Exchange Act and CFTC Regulations, as charged.
In a related criminal action, the US Attorney’s Office for the District of New Jersey has obtained a criminal indictment against both Cifuentes, charging them with one count of wire fraud conspiracy, four counts of wire fraud, and one count of embezzlement and theft by a commodity pool operator.
The conspiracy and wire fraud charges each carry a maximum penalty of 20 years imprisonment and a $250,000 fine, while the commodity pool operator embezzlement and theft charge carries a maximum penalty of 10 years imprisonment and a $1 million fine, or twice the gross gain or loss from the offense.