Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich January 13, 2012

The CFTC has obtained a federal consent order against Jeffrey L. Groendyke (and his trade name JG Forex Fund) requiring him to pay $963,141 in restitution and $420,000 in civil monetary penalty for operating an over-the-counter foreign exchange (“forex”) Ponzi scheme. Groendyke is also permanently banned from engaging in any commodity-related activity. The defendant was never registered with the CFTC as a Commodity Pool Operator (“CPO”).

According to the order entered by a U.S. District Court Judge in Michigan, Groendyke fraudulently solicited the public to invest in a forex trading pool. He primarily solicited members of his local church, and represented himself as a successful trader with a profitable trading history. He told prospective investors that the forex pool was a “long term investment” suitable for retirement funds. In this manner, he was able to take $1,009,844 from 42 individuals.

However, of that total, the order finds that the defendant only used $366,950 to actually trade forex. Of that amount, he lost $324,228 through bad trades. Of the remaining money, Groendyke used $46,703 to make Ponzi payments to pool participants in order to perpetuate his scheme. He also misappropriated and lost $5,503 in customer funds trading in his own personal commodity futures account. A further $501,510 was used by third parties who in turn used the funds on activities other than forex trading. Finally, Groendyke spend $131,899 on personal expenses, including computer equipment, rent, groceries, restaurants, hotels, and retail goods. During the scheme, he never revealed to customers that funds were used for anything other than forex trading.

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

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