Santa Fe, New Mexico resident Douglas Lien has been ordered to pay over $10.3 million in penalties and restitution for running a two-decade-long fraud scheme involving commodity futures, the Commodity Futures Trading Commission (CFTC) announced Friday.
The U.S. District Court for the District of New Mexico entered a consent order permanently banning Lien from trading and registering with the CFTC. He admitted to misappropriating client funds intended for U.S. Treasury Bond futures trading and concealing the fraud through false account statements.
According to court documents, Lien solicited over $14.2 million from 45 individuals between August 2000 and December 2019. Instead of investing the funds, he operated a Ponzi scheme, using new investor money to pay existing clients. He also allegedly pocketed more than $3.5 million in fraudulent “management fees” based on fabricated trading profits.
The court requires Lien to pay $5,195,679 in restitution to his victims and a $5,195,679 civil penalty. He also falsified IRS Form 1099s, reporting millions in non-existent profits to clients. Furthermore, Lien operated without registering as a futures commission merchant (FCM), violating federal regulations.
The CFTC filed the enforcement case in December 2019. While the agency cautions that recovery of lost funds is not guaranteed, they emphasize their commitment to protecting customers and holding perpetrators accountable. The New Mexico Securities Division assisted in the investigation.
Bryan Hsueh, Susan B. Padove, David A. Terrell, Scott R. Williamson, and Robert T. Howell of the CFTC’s Division of Enforcement led the case.
Source: CFTC.gov
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