Brad L. Demuzio, of Chubbuck, Idaho, has been permanently banned from trading and registration in commodity markets after being found liable for operating a $1.8 million foreign currency (forex) Ponzi scheme. The U.S. Commodity Futures Trading Commission (CFTC) secured a consent order and default judgment against Demuzio and his company, Demuzio Capital Management, LLC (DCM), on November 1, 2012, in the U.S. District Court for the District of Idaho.
The CFTC charged Demuzio and DCM with violating anti-fraud provisions of the Commodity Exchange Act and failing to register as Commodity Pool Operators (CPOs). The court found that from June 18, 2008, through November 2011, Demuzio solicited approximately $1.8 million from at least 16 investors for a pooled forex investment. Instead of trading the funds, the court determined Demuzio misappropriated investor money to cover personal expenses and falsely reported to investors that their principal remained intact and was generating profits.
The final orders impose a permanent injunction against both Demuzio and DCM, along with permanent trading and registration bans. They are jointly ordered to pay $805,273 in restitution to defrauded investors. Demuzio is personally responsible for a $1 million civil monetary penalty, while DCM must pay $2,415,819.
In a related criminal case, Demuzio pleaded guilty to one count of wire fraud in the U.S. District Court for the District of Idaho. His sentencing is scheduled for November 5, 2012. The CFTC collaborated with the U.S. Attorney’s Office for the District of Idaho and the Federal Bureau of Investigation on this case.
The CFTC staff members involved in the enforcement action included Lara Turcik, Christopher Giglio, Manal M. Sultan, Lenel Hickson, Jr., Stephen J. Obie, and Vincent A. McGonagle.
Source: CFTC.gov
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