US court orders scam broker 4X Solutions to pay $11 mln in penalties

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The New York District Court has ordered the forex broker 4X Solutions Inc. and its principal Whileon Chay to pay almost $11 million in fines and disgorgement for the operation of a Ponzi scheme between April 2008 and November 2011, the US Commodity Futures Trading Commission (CFTC) said on Monday. The sums – $2 745 226 in disgorgement and $8 235 678 in civil monetary penalty, were sought in a complaint filed by the CFTC in April 2013 against 4X Solutions and Chay in connection to the forex trading Ponzi scheme.

The court found that the defendant Chay and his wife were the only principals of 4X Solutions and had nearly exclusive control over the activities of the company. They have managed to defraud 19 persons and entities out of $4.8 million by promising them returns of between 24 and 36% per year and claiming the ability to profit even in adverse market conditions “when most have lost and lost dearly.” Chay and 4x Solutions did not properly inform their victims of the risk of forex trading and claimed they had not suffered a single losing month in 14 years and that 4X provides “a safe haven in our current financial environment.”

In fact, however, Chay lost $1 985 754 trading forex and misappropriated $2 745 226 to pay for personal expenses (including, but not limited to luxury cars, limousine services, expensive restaurants, vacations), trade securities, fund 4X’s operations, and make purported profit and investment return payments to pool participants. According to the court findings, Chay never disclosed the true financial situation, but instead was issuing false account statements on a monthly basis where he presented 4X Solutions as profitable. “Any trading profits and/or investment returns paid to pool participants were false”, found the court. “All or nearly all of the purported trading profits and/or investment returns that Defendants paid to pool participants came from the principal of other pool participants.”

In conclusion, the CFTC urged prospective investors to exercise caution. It also warned the victims of scams that victims that disgorgement Orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. “The CFTC will continue to fight vigorously for the protection of customers to ensure the wrongdoers are held accountable”, it pledged.

The victims of Chay’s Ponzi scheme would probably never get their money back. Media reports quote the prosecutors as saying that Chay fled to Peru in 2011, while still under investigation and neither he nor any lawyer responded to the civil case, filed by the CFTC in 2013. According to the same media reports, Chay used over $150 000 of the stolen money to freeze the body of his wife who died in 2009, with the hope that the future technological advancements would be able to revive her. The media reports claim nobody knows where the body of the wife is.

Source: theforexreview.com/2016/02/09/us-court-orders-scam-broker-4x-solutions-to-pay-11-mln-in-penalties/
 
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