Rochester, NY – January 27, 2009 – Michael A. Kardonick and Gary R. Shapoff are facing federal charges of fraud following an investigation by the U.S. Commodity Futures Trading Commission (CFTC). The CFTC obtained a court order in Rochester, New York, freezing the assets of Atwood & James, Ltd., Atwood & James, S.A., Inc., and the individuals Kardonick and Shapoff.
The complaint alleges that Kardonick, residing in Brooklyn, New York, Pembrook Pines, Florida, and Rio de Janeiro, and Shapoff, of Pittsford, New York, fraudulently solicited over $1.2 million from retail clients worldwide to trade foreign currency (forex) options. The scheme, operated through the website www.atwoodjames.com, allegedly involved false claims about the success of Atwood & James, promising high returns with little risk.
According to the CFTC, Atwood & James and Kardonick misappropriated client funds. The investigation revealed that Kardonick’s personal trading accounts sustained net losses of approximately $1.7 million between 2003 and September 2008. The defendants are also accused of operating out of Rio de Janeiro, Brazil, and failing to register with any financial regulatory authority.
Adding to the severity of the charges, Kardonick and Shapoff both failed to disclose prior criminal convictions for mail and wire fraud. Shapoff also faced previous CFTC reparations actions related to misrepresentation, misuse of customer funds, and order executions.
The court, presided over by Honorable Charles J. Siragusa, has appointed a receiver to marshal assets and prohibits the destruction of documents. A hearing to determine whether a preliminary injunction should be issued against the defendants is scheduled for February 6, 2009.
The CFTC is seeking a permanent injunction against all defendants, restitution for defrauded customers, repayment of ill-gotten gains, and monetary penalties. The investigation was assisted by the Brazilian Comissão de Valores Mobiliarios and the British Financial Services.
Source: CFTC.gov
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