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The U.S. Commodity Futures Trading Commission (CFTC) announced on Thursday it has filed charges against Thomas Lanzana, Nikolay Masanko, and their companies Blackbox Pulse and White Cloud Mountain. The CFTC accuses them of illegally soliciting more than $700,000 from their off-exchange foreign currency derivatives customers by running a Ponzi scheme.
Neither of the companies were registered with the CFTC, as required.
In its complaint, the CFTC says that the fraudulent scheme functioned from February 2013 to February 2017. The defendants claimed that Lanzana was a successful forex trader and encouraged their (prospective) clients to invest in off-exchange forex pools. In fact, he lost more than $12,000 in forex trading using his personal accounts. To mask the truth, Lanzana and Masanko sent false customer account statements and false tax documents to their clients and also posted false monthly account statements to their companies’ websites showing balances in excess of $800,000 for a forex trading account that, of course, did not exist.
Furthermore, the CFTC complaint also alleges that Lanzana misappropriated around $350,000 from the pool participants. He used part of the money to repay some investors in the manner of a Ponzi scheme, misrepresenting them as profits. Another portion of the money was allegedly used for Lanzana’s personal expenses (including purchases on Amazon.com, payments to a luxury car dealer, a jewelry retailer, and golf expenses, among others).
All assets under the defendants’ control are frozen by an emergency court order and Lanzana and Masanko are prohibited from “destruction or concealment of their books and records”. The CFTC has also asked the court to provide full restitution to defrauded clients, disgorgement of ill-gotten gains and to pay the appropriate civil monetary penalties. In its continuing litigation, the CFTC seeks to impose permanent trading and registration bans on the defendants and their companies.