US court orders 4X Solutions, principal to pay $11 mln in disgorgement, penalties for forex Ponzi scam

US court orders 4X Solutions, principal to pay $11 mln in disgorgement, penalties for forex Ponzi scam

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The New York District Court has ordered forex broker and software provider 4X Solutions and its principal, Whileon Chay, to pay a combined $11 million in disgorgement and penalties in relation to a forex Ponzi scheme which they run, the US Commodity Futures Trading Commission (CFTC) said on Monday. 4X Solutions and Chay have to pay a penalty fee of repay $8.24 million and to repay the $2.75 million to their victims.

The Court ruled its decision on 29 January, 2016.

The penalty exceeds by three times the misappropriated amount.

Chay and the brokerage, of which he was in control, have lost nearly $2.0 million trading forex instruments and have misappropriated about $2.75 million to pay Chay’s personal expenses, including luxurious resorts and exotic car rentals, trade securities, fund 4X Solutions’ operations, and make purported profit and investment return payments to pool participants.

In other words, Chay and 4X Solutions obtained $4.8 million from at least 19 pool participants by promising them returns on their investment of 24-36% within a year and claiming to provide them profit even in adverse market conditions, or in their wirds “when most have lost and lost dearly.”

In addition, Chay and the brokerage advertised their work by saying they had not seen a single losing month in 14 years and that 4X provides “a safe haven in our current financial environment.”

In April 2013, the CFTC filed an enforcement action in the New York District Court in relation to the fraud conducted by 4X Solutions and Chay. The commission alleged at the time that Chay had concealed the trading losses by issuing false account statements on a monthly basis where he presented 4X Solutions as profitable.

The CFTC noted investors to be cautious and to check on the brokers with which they choose to engage. It highlighted that disgorgement Orders may not always result in the recovery of lost funds since offenders may not always have sufficient funds to cover the amount.

In the recent year, forex scams have increased significantly in number. To help traders protect themselves from malicious brokers, the CFTC has issued on its website a set of advisories with warning signs that can help citizens identify fraudulent entities.

Source: CFTC


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