The CFTC has filed a complaint against Alpha Trade Group (“ATG”), an unregistered Commodity Pool Operator (“CPO”) and its employees, directors, and agents Jose Martinez, Welinton Bautista, Maria Gutierrez, Yehodiz Padua, Maria Rodriguez, and Francisco Suero. The defendants allegedly operated a $1.7 million off-exchange foreign exchange (“forex”) and commodity futures scheme resulting in the misappropriation of customer funds. All the defendants were Florida residents, with the exception of Suero, who is a resident of Mexico. They solicited and accepted money primarily from U.S. customers in Florida, California, and Puerto Rico.
According to the CFTC, from April to December 2009, Martinez, Bautista, Padua, and Suero operated ATG as a CPO, and solicited participants to invest with the firm’s associated pools. They told prospective investors that the pools traded forex and futures contracts, among other investments. They also told participants that their principal would be held risk free, and guaranteed monthly returns between 12.5 and 25.5%. In this manner they were able to solicit $1.7 million from approximately 300 participants.
However, the complaint alleges that only a small portion of the funds solicited were ever invested. A fraction, about $57,500, went to a forex company in Anguilla, and none were ever used to trade futures contracts. Much of the money invested was used to pay off participants who requested withdrawals from their accounts. The balance of the funds were misappropriated for their own personal benefit, using hundreds of thousands of dollars for living expenses, furniture, and to finance trips to Spain, Switzerland, and Panama. To disguise the fraud, Martinez, Bautista, Padua, and Suero prepared false online account statements for the CPO, showing the promised returns. At one point, the defendants even had an attorney draft a letter promising future payments that never materialized.
The Justice Department has already filed a Complaint for Forfeiture in rem, alleging over $300,000 was gained in connection with wire fraud. The CFTC is seeking return of ill-gotten gains, restitution to defrauded customers, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the Commodity Exchange Act for the CPO and other defendants.