Jacob N. Stein of Hankins, New York, has been ordered to pay $244,400 in restitution to defrauded customers and a $100,000 civil penalty for committing fraud and misappropriation related to a commodity pool trading foreign currency contracts. The U.S. Commodity Futures Trading Commission (CFTC) announced the order on August 11, 2014.
According to the CFTC’s order, between January 2010 and September 2012, Stein solicited approximately $524,000 from at least 17 investors for a commodity pool intended to trade leveraged forex. He used roughly $83,000 of these funds to trade, losing over $80,000. Instead of informing investors of these losses, Stein allegedly fabricated account statements to create the illusion of profitability.
The CFTC found that approximately $441,000 of the investor funds were misappropriated by Stein. This money was used to pay fabricated “profits” and return principal to other investors, as well as to cover Stein’s personal expenses, including car payments and retail purchases. Ten investors are currently owed approximately $244,400 in principal.
Stein operated without registering with the CFTC as a Commodity Pool Operator. The CFTC order mandates that he cease and desist from further violations of the Commodity Exchange Act and CFTC regulations. Furthermore, Stein is permanently banned from trading, registration, and other CFTC-regulated activities.
The CFTC cautioned that restitution orders do not guarantee recovery of lost funds, as wrongdoers may lack sufficient assets. The agency affirmed its commitment to protecting customers and holding accountable those who violate commodity trading laws.
The case was led by CFTC Division of Enforcement staff members Patrick Daly, Xavier Romeu-Matta, Michael C. McLaughlin, David W. MacGregor, Lenel Hickson, Jr., and Manal M. Sultan.
Source: CFTC.gov
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