Chicago, IL – The U.S. Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Louis Carabini, Michael Carabini, and three affiliated companies – Monex Deposit Company, Monex Credit Company, and Newport Services Corporation (collectively, Monex) – alleging a massive precious metals fraud impacting thousands of retail investors nationwide.
The lawsuit, filed in the U.S. District Court for the Northern District of Illinois, accuses the defendants of defrauding customers out of hundreds of millions of dollars through illegal, off-exchange leveraged commodity transactions. The scheme allegedly ran from July 2011 to March 2017, primarily through Monex’s “Atlas” program, which offered leveraged trading in gold, silver, platinum, and palladium.
According to the CFTC’s complaint, Monex marketed the Atlas program as a safe and profitable investment opportunity, despite the fact that nearly all participants lost money. Over 12,000 trading accounts placed leveraged precious metals trades resulting in over $290 million in customer losses during the specified period. The agency alleges that Monex employed high-pressure sales tactics, downplayed risks, and falsely claimed to act as fiduciaries for their customers.
“Today, we announce the filing of one of the largest precious metals fraud cases in the history of the Commission,” stated James McDonald, the CFTC’s Director of Enforcement. “As alleged, the Defendants defrauded thousands of retail customers—many of whom are elderly—out of hundreds of millions of dollars as part of a multi-year scheme.”
The CFTC also alleges that Monex failed to register as a Futures Commission Merchant (FCM) as required by the Commodity Exchange Act. Furthermore, the leveraged commodity transactions were not executed on a regulated exchange, violating the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The complaint seeks injunctive relief, disgorgement of ill-gotten gains, and civil penalties against the defendants. The CFTC alleges that while customers lost their life savings, Monex and its owners profited significantly from the fraudulent scheme.
Source: CFTC.gov
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