Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich October 26, 2011

The CFTC has filed a complaint against Linda and Chance Harris, and their companies CDH Forex Investments and CDH Global Holdings. The Texas-based defendants  are accused of engaging in foreign exchange (“forex”) solicitation fraud and misappropriation of investor funds.

According to the complaint, from August 2008 to July 2010, the defendants solicited and accepted funds from the general public, ostensibly to trade off-exchange forex. Linda and Chance Harris told potential investors that the past performance for accounts they managed was in the triple digits for three years running. In certain promotional material, they claimed to have earned an annual return as high as 646%. They also misled investors about the size of the assets currently under their management. In this manner, the Harrises were able to solicit over $2.2 million. Some of that money was invested through the defendants, while the majority was sent into forex accounts at an FCM to be managed by the Harrises.

The CFTC says that  the accounts containing money invested directly in the  FCM to be managed by the Harrises ($1.87 million) sustained heavy losses topping $795,000. The remainder was transferred back to customers or paid to the defendants in commission. Of the funds given to the defendants to be invested (approximately $395,000), only about $61,000 was ever placed into forex accounts. The balance of the funds was allegedly misappropriated for personal expenses, including rent for the Harris family home, payments on a BMW, and credit card bills.

To perpetuate their scheme, the defendants allegedly issued false monthly account statements to customers showing that the managed accounts were profitable. In April 2010, the NFA arrived to perform an audit on CDH Forex and CDH Global. When they requested account and bank statements to substantiate the defendants’ disclosure documents, they were given falsified statements for accounts that have never existed.

The CFTC  is seeking a 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.

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

Comments are closed.