Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich September 2, 2011

The CFTC has filed and settled charges against Roy Scarboro for fraudulent solicitation and misappropriation as part of an over-the-counter foreign exchange (“forex”) trading scam. The North Carolina resident has been ordered to pay a civil monetary penalty of $350,000, and is permanently prohibited from trading on a CFTC-registered entity, or from registering or seeking exemption with the CFTC himself.

According to the CFTC, Scarboro began soliciting individuals to trade off-exchange leveraged forex contracts beginning in June 2009. He represented to at least one participant that about 20% of their investment would be put into a forex trading pool called Capital Asset Management Fund, while the rest would be used to purchase U.S. Treasuries. He was able to solicit $713,000 from at least six individuals.

Once in possession of client funds, Scarboro never purchased any U.S. Treasury instruments. Instead, he deposited $612,00o in forex trading accounts with various Futures Commission Merchants (“FCMs”). These trades consistently resulted in substantial losses, without a single month of profitability. The defendant ultimately incurred $597,000 in losses. However, he issued false monthly account statements showing modest profits and and only occasional losses. He also did not report that he had misappropriated $59,000 of client money for personal use.

Earlier this year, Scarboro was sentenced to 26 months in prison and ordered to pay $682,663.62 in restitution to defrauded customers in relation to the same forex fraud scheme.

Read more about this CFTC enforcement action.
Creative Commons License photo credit: notsogoodphotography

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