Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich February 7, 2013

The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court Order against defendants Rodney Wagner and Roger Wagner, and their company GID Group, Inc. The Texas court requires the Wagner brothers and GID to jointly pay approximately $1.37 million in restitution to defrauded customers, and a civil monetary penalty of approximately $1.05 million. The consent Order also imposes permanent trading and registration bans against the defendants, prohibiting them from violating the anti-fraud provisions of the Commodity Exchange Act.

CFTC and Forex Scheme

The Wagner brothers were the owners and only employees of GID Group, and neither of the defendants have ever been registered with the CFTC. Charges brought against the brothers were entered by Judge David C. Godbey of the U.S. District Court for the Northern District of Texas, and filed on November 8, 2011. The brothers were charged with solicitation fraud and misappropriation while operating a multi-million dollar foreign currency (forex) Ponzi scheme.

According to a press release issued by the CFTC, the Order finds that the Wagner brothers fraudently solicited and accepted funds of at least $5.5 million from close to 99 customers to trade off-exchange forex contacts on a leveraged or margined basis. While soliciting customers, the brothers represented themselves as experienced and successful forex traders, claiming to generate six percent returns per day through their forex trading, and could return principal plus 200 percent of customer deposits.

The Order finds the Wagner brothers representations false — specifically highlighting how the Wagner brothers transferred only a total of $590,000 of GID customer funds into two personal trading accounts. The brothers also sustained consistent net trading losses each month, and misappropriated a majority of customer funds, while using a portion of the stolen funds to pay for personal expenses, pooling participants’ returns.

The Wagner brothers concealed their fraud by distributing false account statements to customers that reported returns supposedly earned as a result of the brothers’ forex futures trading.

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