Los Angeles, CA – Jinsup Choi, a California resident, was ordered to pay over $11 million in restitution and penalties after being found liable for operating a $19 million Ponzi scheme involving commodity futures contracts, the Commodity Futures Trading Commission (CFTC) announced October 24, 2008.
The U.S. District Court for the Central District of California approved a consent order against Choi on October 22, 2008, following a complaint filed by the CFTC and the California Commissioner of Corporations on August 27, 2008. The complaint detailed that Choi defrauded approximately 83 individuals between June 2002 and April 2007.
Operating under the name Futures Investment Group, Choi falsely represented to investors that their funds would be used for profitable futures trading. However, the court found that Choi never generated any actual profits from these transactions. Instead, he operated a classic Ponzi scheme, using funds collected from new investors to pay “interest” and “profits” to earlier investors, totaling approximately $9 million.
Choi further deceived investors by mailing them false account statements designed to create a false sense of security and prevent complaints to authorities. He allegedly used the stolen funds to finance a lavish lifestyle, purchasing jewelry, luxury automobiles, a yacht, and a home.
In addition to the $10,035,614 in restitution, Judge A. Howard Matz ordered Choi to pay a $1,000,000 civil monetary penalty. Choi also pleaded guilty to two counts of wire fraud on January 28, 2008, in a related criminal case (U.S. v. Jinsup Choi, aka Gene Choi, Cr. No. 08-00108, C.D. Calif.).
The CFTC collaborated with the U.S. Attorney’s Office for the Central District of California, the FBI, and the California Commissioner of Corporations throughout the investigation. Kathleen Banar, Kim Bruno, Richard Foelber, Rick Glaser and Richard Wagner of the CFTC’s Division of Enforcement were responsible for the case.
Source: CFTC.gov
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