The Commodity Futures Trading Commission announced Judge Virginia Covington of the U.S. District Court for the Middle District of Florida entered a summary judgment order on December 6 for a permanent injunction, monetary sanctions, and equitable relief against Michael DaCorta of Florida.
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On December 15, Judge Covington also entered consent orders against Oasis International Group, Limited (OIG); Oasis Management, LLC (OM); Satellite Holdings Company (SHC); Florida residents Joseph Anile and Frank Duran; Pennsylvania resident Raymond Montie; and New York resident John Haas (the settling defendants).
The summary judgment order finds against DaCorta for all violations of the Commodity Exchange Act (CEA) and CFTC regulations alleged in the complaint, including operating and participating in a fraudulent scheme that resulted in approximately 800 pool participants sending over $80 million to OIG, OM, and SHC for trading in leveraged, margined, or financed retail foreign currency transactions (retail forex), as well as registration and other regulatory violations.
The summary judgment order requires DaCorta to pay $53,270,336.08 in restitution and an $8,453,628.48 civil monetary penalty, an amount triple to DaCorta’s personal gain in the fraudulent scheme.
In its order, the court noted this penalty was necessary to account for the severity of the conduct and to provide sufficient future deterrence because DaCorta violated core provisions of the CEA knowingly and repeatedly; did not accept responsibility for his actions; and committed these violations while already bound by a 2010 settlement with the National Futures Association (NFA) that prohibited him from trading in any capacity that would require NFA registration.
On May 4, 2022, DaCorta was criminally convicted of conspiracy to commit wire fraud and mail fraud, illegal monetary transactions, and filing a false income tax return in relation to his operation of the Oasis entities. He is currently serving a 23-year prison sentence.
The consent orders resolve charges against the settling defendants for their operation of, or participation in, the same fraudulent scheme. Per the consent orders, certain of the settling defendants misappropriated more than $46 million and lost over $21 million trading retail forex.
The consent orders require OIG, OM, SHC, and Anile to pay $53,270,336.08 in restitution to defrauded pool participants. Additionally, the consent orders require Anile to pay a $5,000,000 civil monetary penalty; Duran to pay $779,738.75 in disgorgement and a $389,869.38 civil monetary penalty; Montie to pay $620,805.69 in disgorgement and a $310,402.84 civil monetary penalty; and Haas to pay $1,103,597.24 in disgorgement and a $551,798.62 civil monetary penalty.
The summary judgment and consent orders find that from approximately April 19, 2014 through April 2019, DaCorta and the settling defendants solicited pool participants, primarily via in-person meetings and conference calls, to participate in commodity pools that would trade in retail forex.
DaCorta and the settling defendants made numerous misrepresentations to these individuals, including that their funds would be used to trade retail forex, that their retail forex trading resulted in annual profits in excess of 20%, and that pool participants were guaranteed at least a 12% annual return.
The summary judgment and consent orders also find DaCorta and the settling defendants encouraged these individuals to recruit others to participate in the pools to earn referral fees.
In reality, per the summary judgment and consent orders, DaCorta and the settling defendants deposited only some pool participant funds into a forex-trading account, losing all the funds trading forex.
In addition, DaCorta and certain of the settling defendants misappropriated significant pool participant funds for their own benefit, including to purchase residences and exotic sports cars. To conceal these losses and misappropriated funds, DaCorta and certain settling defendants issued pool participants false account statements that reflected balances unsupported by available money and other assets.
In addition to their misrepresentations and misappropriation, the summary judgment and consent orders find DaCorta and the settling defendants failed to register with the CFTC, improperly commingled and received pool funds, and failed to provide pool participants necessary disclosures.
The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
The CFTC acknowledges and thanks the U.S. Attorney’s Office for the Middle District of Florida, the Florida Office of Financial Regulation, the Federal Bureau of Investigation, the Internal Revenue Service, the Cayman Islands Monetary Authority, and the United Kingdom Financial Conduct Authority for their assistance in this matter.
The Division of Enforcement staff responsible for this action are Elsie Robinson, Alison Auxter, Jenny Chapin, Alan Simpson, Jeff Le Riche, Christopher Reed, Charles Marvine, and former staff member Jo Mettenburg.
The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC. ■