Chicago, IL – Christopher Varlesi, 41, was ordered to pay over $1.3 million in restitution and penalties for running a fraudulent commodity pool and forex trading scheme, the Commodity Futures Trading Commission (CFTC) announced today. The judgment, entered June 12, 2013, in the U.S. District Court for the Northern District of Illinois, also permanently bans Varlesi from trading commodities and registering with the CFTC.
Varlesi, operating under the name Gold Coast Futures and Forex, allegedly defrauded at least 20 investors out of $1.7 million. The CFTC filed a complaint against Varlesi in March 2012, accusing him of making false statements, misappropriating funds, and failing to register as a Commodity Pool Operator.
According to the court order, Varlesi solicited investments by falsely touting his trading expertise and promising fixed monthly returns through promissory notes. However, the CFTC found that he only used approximately $220,000 of the $1,716,169 raised to actually trade futures and forex contracts.
Instead, Varlesi diverted over $1.3 million of investor funds to cover business and personal expenses, including food, utilities, entertainment, tuition, and even spa treatments. He then used approximately $1,343,471 to pay earlier investors with funds from newer investors – a classic Ponzi scheme, according to the CFTC.
To maintain the facade, Varlesi provided fabricated account statements and false performance documentation to investors, concealing the misappropriation of funds. In March 2011, the scheme began to unravel when Varlesi admitted to a participant that there was no money left in the account and stopped making promised interest payments.
As of June 25, 2013, Varlesi still owes approximately $638,227 to 17 investors. The court order requires Varlesi to pay $638,000 in restitution to the defrauded investors, as well as a $700,000 civil monetary penalty. The CFTC worked in conjunction with the United States Attorney’s Office for the Northern District of Illinois and the Illinois Secretary of State Securities Department on the case.
Source: CFTC.gov
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