Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich November 14, 2011

The CFTC has obtained a consent order of permanent injunction against Patrick Rakotonanahary, as well as a default judgement against Rakotonanahary’s company Cyber Market Group, LLC. The defendants were found to have operated a multimillion dollar foreign exchange (“forex”) Ponzi scheme.

According to the consent order, Rakotonanahary and Cyber Market Group solicited the public to loan the company money in order trade forex beginning in June 2008. The defendants promised potential investors weekly returns of four to ten percent as part of a “Promissory Program.” Rakotonanahary also claimed that Cyber Market Group lost money only once during its formative years. In fact, the defendants lacked the resources to pay the returns, and Cyber Market Group lost money over the whole life of its forex trading accounts.

Instead of investing in forex, the defendants misappropriated the millions they solicited. Rakotonanahary used some funds to pay personal expenses, and the rest the defendants used to make Ponzi payments to other clients. In order to perpetuate the scheme, Rakotonanahary wrote a letter to at least one client claiming that Cyber Market Group had  $8 million in its forex margin account.

The consent order requires the defendants to each pay $500,000 as a civil monetary penalty, and permanently prohibits them from registering with the CFTC or trading forex or commodity futures. In a related criminal case prosecuted by the U.S. Attorney’s Office, Rakotonanahary was ordered to pay $3,473,562.56 in restitution to Cyber Market Group’s defrauded clients and sentenced to 90 months in prison.

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