Jeffrey J. Kinseth of Cedar Rapids, Iowa, has been charged with fraud by the U.S. Commodity Futures Trading Commission (CFTC), the agency announced February 23, 2012. Kinseth and his company, Virtual Vision Inc., were accused of fraudulently soliciting investments, misappropriating funds, and issuing false statements to investors.
The CFTC’s order alleges that between March 2008 and September 2009, Kinseth and Virtual Vision collected approximately $975,360 from around 11 individuals, promising to trade commodity futures and foreign currency contracts. However, the agency claims the majority – over $800,000 – was used to make payments to existing investors (a classic hallmark of Ponzi-like schemes) and for Kinseth’s personal expenses.
According to the CFTC, trading conducted by Kinseth and Virtual Vision consistently resulted in losses. These losses, along with the misappropriated funds, were concealed through the creation and distribution of falsified account statements that falsely showed investors were earning profits.
The settled charges require Kinseth and Virtual Vision to jointly pay a $575,000 civil penalty and restitution totaling $574,936. Furthermore, both Kinseth and his company are permanently prohibited from any involvement in commodity-related trading or registration with the CFTC. Kinseth was not registered with the CFTC at the time of the alleged offenses.
The case was led by CFTC Division of Enforcement staff members Brian G. Mulherin, Timothy M. Kirby, Gretchen L. Lowe, and Vincent A. McGonagle.
Source: CFTC.gov
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