Aggregated News From Investment Management Regulators

Federal Court Orders Defendants to Pay Nearly $1.3 Million in Forex Fraud Scheme

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The Commodity Futures Trading Commission today announced that the U.S. District Court for the Eastern District of Missouri entered an order of default judgment finding that Joshua Christian McDonald and his company, Perfection PR Firm LLC (PPR), committed fraud, misappropriated customer funds, and operated without proper registration. The defendants operated out of California and Tennessee.

The court’s June 9, 2020 order requires the defendants to pay $360,565 in restitution to defrauded customers and a civil monetary penalty of $935,907. Additionally, the order permanently enjoins the defendants from engaging in conduct that violates the Commodity Exchange Act, from registering with the CFTC, and from trading in any CFTC-regulated markets.

The order resolves a CFTC enforcement case filed on February 14, 2020, charging the defendants with fraud and misappropriation related to an off-exchange foreign currency (forex) trading scheme in which they solicited funds totaling at least $440,000 from at least 12 customers, including multiple residents of Missouri. [See CFTC Press Release No. 8119-20]  The CFTC charged that, in soliciting funds for and operating a pooled investment vehicle, PPR acted as an unregistered commodity pool operator and McDonald acted as an unregistered Associated Person of PPR. The defendants falsely represented to prospective customers that McDonald was profitably trading forex and promised customers that their accounts would grow in value 10 to 50 percent per month, among other things. In fact, McDonald did not trade forex as successfully as he claimed and actually lost money. Moreover, the defendants misappropriated customers’ funds by transferring funds into cryptocurrency accounts in McDonald’s name, paying McDonald’s personal expenses, and failing to return funds upon customers’ requests. Customers lost most or all of their funds as a result of the defendants’ fraud and misappropriation.

Related Criminal Action

In a related criminal case, on January 29, 2020, the United States Attorney for the Eastern District of Missouri indicted McDonald on four counts of wire fraud. [See United States v. Joshua C. McDonald, 4:20-CR-70 SRC SPM (E.D. Mo.)]

The CFTC appreciates the assistance of the United States Attorney’s Office for the Eastern District of Missouri, the Federal Bureau of Investigation, the Securities Division of the Missouri Secretary of State’s Office, and the Securities Division of the Mississippi Secretary of State’s Office.

The CFTC cautions victims that restitution orders may not result in the recovery of money lost, because wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure wrongdoers are held accountable.

The Division of Enforcement staff members responsible for this action are Dmitriy Vilenskiy, Julia Colarusso, Hillary Van Tassel, Christine Ryall, Paul Hayeck, and former staff member Greta Gao. 

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Regulator Information

Abbreviation: CFTC
Jurisdiction: USA

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