WASHINGTON, D.C. – Gordon Jack Vandeveld, of Glenview, Illinois, has been found guilty of forex futures fraud by the U.S. District Court for the Western District of Tennessee, the Commodity Futures Trading Commission (CFTC) announced today, December 12, 2007. Judge Bernice B. Donald issued the decision following a trial that revealed Vandeveld’s deceptive practices led to significant losses for his clients.
Vandeveld, a broker with Tennessee-based FxTrade Financial, LLC, was found to have made false statements to investors and potential investors regarding potential returns and the risk associated with investing with FxTrade. Specifically, he falsely claimed extraordinary rates of return and the existence of a standby letter of credit, leading investors to believe their investment was risk-free. He also misrepresented his and his wife’s investment in FxTrade, the firm’s operational history, and the total number of investors.
The court determined the transactions in question were futures transactions under CFTC jurisdiction, not simple spot transactions. Evidence presented at trial included testimony from four investors who lost most of their funds after being brought to FxTrade by Vandeveld, as well as testimony from two potential investors.
As a result of the judgment, Vandeveld is ordered to pay a $1,920,000 civil penalty and more than $406,000 in restitution to defrauded customers. He is also permanently barred from any activity related to commodities trading. Vandeveld filed an appeal to the U.S. Court of Appeals for the Sixth Circuit on November 21, 2007.
Vandeveld was one of several individuals and entities sanctioned in the CFTC’s anti-fraud action, originally filed in 2004. In addition to Vandeveld, the court issued default judgments against FxTrade, principal Jeffrey A. Mischler of Germantown, Tennessee, brokers Mary Jo Sibbitt of Glen Ellyn, Illinois, Ernst H. Behr of Denver, Colorado, Reverie LLC of Glen Ellyn, Illinois, and Lee N. Romano II of Union, Illinois. Collectively, these defendants are ordered to pay $9,946,000 in monetary sanctions, including $9,120,000 in penalties and $826,000 in restitution.
Penalties imposed on the other defendants include $2,640,000 against FxTrade and Mischler each, $720,000 against Sibbitt, $360,000 against Behr and Romano, and $480,000 against Reverie LLC. All defaulting defendants are also prohibited from engaging in any commodity-related activity and are required to contribute to the $826,500 restitution owed to FxTrade’s defrauded investors.
Source: CFTC.gov
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