Joshua Wallace, of Tigard, Oregon, faces charges of solicitation fraud and making false statements to the National Futures Association (NFA), following a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the Southern District of New York on November 24, 2010.
Wallace, the founder and principal of System Capital, LLC, based in Lake Oswego, Oregon, allegedly fabricated a ten-year history of successful trading of E-Mini S&P 500 futures contracts. He and his company are accused of falsely claiming this success continued after the formation of System Capital and that the firm managed at least $28 million in assets – all untrue, according to the CFTC.
The complaint details that these false representations were used to solicit clients, resulting in System Capital gaining at least 17 clients and managing approximately $3.5 million in client funds. The firm then directed the trading of these clients’ commodity futures accounts based on the fabricated history.
Further allegations state that Wallace knowingly provided false information and forged documents to NFA auditors during an audit in May 2010. This included false statements about System Capital’s promotional materials and a fabricated report from a major accounting firm detailing the firm’s trading history.
The CFTC is seeking rescission of all contracts, full restitution to defrauded clients, the return of any ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against further violations of federal commodities laws. The CFTC worked in conjunction with the NFA, the Federal Bureau of Investigation, and the U.S. Attorney’s Office for the Southern District of New York on this case.
Source: CFTC.gov
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