BUDA, TEXAS – August 31, 2012 – Christopher B. Cornetto of Buda, Texas, has been ordered to pay over $16.9 million in restitution and penalties for running a fraudulent foreign currency (forex) investment scheme, the U.S. Commodity Futures Trading Commission (CFTC) announced today.
Judge Lee Yeakel of the U.S. District Court for the Western District of Texas entered a default judgment on August 24, 2012, requiring Cornetto to pay $10.16 million in restitution to defrauded investors and a $6.78 million civil monetary penalty. The order also permanently bans Cornetto from trading commodities and registering with the CFTC, effectively prohibiting any future violations of federal commodities law.
The CFTC initially filed a complaint against Cornetto on February 2, 2012, alleging solicitation fraud, the issuance of false account statements, misappropriation of investor funds, and failure to register as a commodity pool operator. The investigation revealed that from at least June 2008 through October 2011, Cornetto solicited approximately $7.07 million from investors for a pooled forex investment operated under various names, including ITLDU, ICM, International Forex Management, LLC, and IFM, LLC.
According to the court’s findings, Cornetto falsely claimed to prospective investors that he had never experienced a losing month or year while trading forex. However, records show that between June 2008 and September 2010, Cornetto only had one profitable month trading forex, earning minimal fees as the pool’s operator. During this period, he misappropriated roughly $1.26 million of investor funds and provided participants with fabricated weekly reports and account statements.
From October 2010 through October 2011, Cornetto secured an additional $6.95 million from investors. He transferred approximately $3.37 million to forex trading accounts with six foreign brokers, losing around $2.3 million at five of them. An additional $905,000 was likely lost at the sixth broker. By October 2011, Cornetto had misappropriated approximately $1 million and less than $520,000 remained in the pool’s bank accounts.
The CFTC acknowledged the assistance of the U.S. Attorney’s Office for the Western District of Texas, the Internal Revenue Service Criminal Investigation, and the Federal Bureau of Investigation in the case. International cooperation was also provided by financial regulatory authorities in the U.K., British Virgin Islands, Canada, Germany, Switzerland, and the Eastern Caribbean.
Source: CFTC.gov
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