Santa Fe, New Mexico resident Douglas Lien is facing civil charges of fraud and failure to register with the Commodity Futures Trading Commission (CFTC), according to a complaint filed December 10, 2019, in the District of New Mexico.
Lien, operating under the name Westend Investments, allegedly solicited over $827,650 from friends and acquaintances beginning at least in 2002, promising to trade U.S. Treasury bond futures contracts. The CFTC alleges that from September 2014 onward, Lien issued falsified account statements and reported over $1.6 million in fabricated profits to clients on annual tax forms.
However, the complaint states that Lien only executed three commodity futures trades during that period, resulting in a combined loss of approximately $200. Furthermore, the CFTC claims Lien misappropriated client funds, utilizing a Ponzi scheme to pay earlier investors and pocketing management fees based on the bogus trading profits.
Throughout 2019, clients began requesting the return of their investments. Lien allegedly stalled these requests with false claims that client funds were locked in long-term investments inaccessible without penalty – a claim the CFTC asserts is entirely untrue.
The CFTC is seeking restitution for defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act. Additionally, the complaint highlights Lien’s failure to register with the CFTC, a requirement for individuals operating in his capacity.
The case is being pursued by Stephanie Reinhart, Susan Padove, Bryan Hsueh, Joseph Patrick, David Terrell, and Scott Williamson of the CFTC’s Division of Enforcement.
The CFTC urges the public to verify the registration of any investment firm using NFA BASIC before committing funds and encourages reporting of suspicious activity via the toll-free hotline 866-FON-CFTC or online complaint form.
Source: CFTC.gov
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