Washington, D.C. – On October 7, 2019, the U.S. Commodity Futures Trading Commission (CFTC) announced enforcement actions against David Sechovich and Peter Szatmari for their roles in a fraudulent binary options marketing scheme. The pair allegedly disseminated millions of misleading solicitations to entice investors into opening and funding accounts with unregistered brokers.
The CFTC issued an order settling fraud charges against Sechovich, requiring him to pay over $2.8 million in penalties and restitution. This includes returning more than $1.8 million to defrauded customers and a civil monetary penalty exceeding $949,000. Sechovich is also subject to trading and registration bans. Separately, the Commission filed a civil enforcement action in the U.S. District Court for the District of Hawaii against Szatmari.
The scheme involved “affiliate marketing,” where Sechovich and Szatmari promoted binary options trading through online solicitations. These campaigns promised prospective customers free access to automated trading software capable of generating substantial profits with no risk. However, the marketing materials contained numerous false and misleading statements, according to the CFTC.
Specifically, neither Sechovich nor Szatmari disclosed that they received commissions from the brokers they recommended for each new funded account. This fee arrangement constituted their sole basis for recommending the brokers. The fraudulent solicitations reached millions of potential customers, resulting in approximately 25,000 individuals opening and funding binary options accounts, typically with an initial deposit of $250 or more. The two men are alleged to have profited at least $3.8 million from the scheme.
The CFTC’s action against Szatmari seeks full restitution for defrauded investors, disgorgement of ill-gotten gains, a civil monetary penalty, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity Exchange Act and CFTC regulations. The agency cautioned that victims may not fully recover their losses due to the potential lack of assets held by the defendants.
The CFTC expressed gratitude for the assistance provided by the U.S. Securities and Exchange Commission in the investigation. This case is related to prior CFTC actions against other individuals and entities involved in similar fraudulent advertising practices.
Source: CFTC.gov
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