Federal court orders nearly $17.5m in sanctions against Florida resident and his companies
Staff Writer |
The U.S. Commodity Futures Trading Commission (CFTC) said that the court ordered Dorian Garcia and his companies jointly to pay restitution totaling $5,051,052 to defrauded investors victimized in a Ponzi scheme they operated from 2010 to 2015.
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The U.S. Commodity Futures Trading Commission (CFTC) said that the U.S. District Court for the Middle District of Florida entered a final Judgment on June 28, 2016, requiring Defendants Dorian Garcia and his companies, DG Wealth Management (DG Wealth), Macroquantum Capital LLC, UKUSA Currency Fund, and DG Wealth’s successor, Quanttra LP, all of Naples, Florida, jointly to pay restitution totaling $5,051,052 to defrauded investors victimized in a Ponzi scheme they operated from 2010 to 2015.
The Judgment also requires the Defendants jointly to pay a $7.5 million civil monetary penalty and to disgorge $4,948,571 in ill-gotten gains.
The Court’s Judgment follows two previous orders entered by Judge Sheri Polster Chappell stemming from a CFTC Complaint filed April 14, 2015 fraud in connection with solicitation of customers for their foreign currency (forex) and commodity options trading pools, 2) misappropriation of customer funds, 3) issuing false account statements, and 4) violating CFTC registration requirements – all in violation of the Commodity Exchange Act (CEA) and CFTC Regulations.
Previously, Judge Chappell entered a Consent Order of Permanent Injunction (Consent Order) on November 16, 2015, that made findings of fact and imposed injunctive relief, and an Order imposing sanctions on June 17, 2016 (sanctions Order). Taken together, the Judgment, Consent Order, and sanctions Order resolve the case.
The Consent Order against the Defendants, and DG Wealth’s successor, Quanttra LP, finds that they violated anti-fraud provisions of the CEA, misappropriated investor funds, and committed registration violations. The Consent Order also imposes permanent trading and registration bans on the Defendants and prohibits them from further violations of the CEA and CFTC Regulations, as charged.
Specifically, the Consent Order finds that Garcia, who had no proven track record, issued false account and bank statements to entice investors, showing exaggerated multi-million dollar account balances and profits that he purportedly made.
The Consent Order further finds that Garcia solicited more than $7.3 million from at least 95 investors, with a shortfall of approximately $3.3 million, some of which was used by Garcia to pay for his personal and business expenses.
Garcia mislead investors and prospective investors by claiming that he did not have to be registered with the CFTC to trade for their accounts and falsely claimed that he had retained a licensed broker who would place customers’ orders by following Garcia’s trading system, the Order finds.
After the Consent Order was entered, the Court held a hearing because the Defendants contested the imposition of monetary sanctions. After the hearing, the Court entered its Sanctions Order.
In a parallel criminal case, on July 14, 2015, the Court accepted Garcia’s written plea agreement on a charge of wire fraud in United States of America v. Dorian Garcia.
The Court sentenced Garcia to a prison term of 78 months and a forfeiture of more than $3 million. On June 21, 2016, Garcia entered into a stipulation agreeing to pay $5,318,052.02 in criminal restitution.
The June 17, 2016 Order in the CFTC’s case recognized the criminal action and provides that the Defendants shall receive a dollar-for-dollar credit against their restitution obligation for any payments Garcia makes to investors pursuant to the criminal restitution order. ■