New York, NY – September 29, 2008 – U.S. District Court Judge George Daniels issued orders against five defendants in three separate cases related to a large-scale investigation dubbed “Operation Wooden Nickel.” The cases, brought by the Commodity Futures Trading Commission (CFTC) in conjunction with the FBI, Department of Justice, and Securities and Exchange Commission, center around fraudulent activity in the sale of illegal forex futures contracts.
The court orders mandate the payment of approximately $11.7 million in restitution and disgorgement, alongside $12.25 million in civil monetary penalties. These rulings add to previous sanctions totaling over $50 million, permanent injunctions, and other relief issued against 27 other defendants between 2006 and 2008 in similar cases.
Michael Ross, of New York, NY, was hit with a $240,000 civil monetary penalty. The court found that from January 1999 to April 2002, while operating Walter, Scott, Lev & Associates, LLC (WSL), Ross and his associate Edward Sapienza, Jr. intentionally misled customers. They made fraudulent misrepresentations about the trading of customer funds, issued falsified account statements showing fabricated profits, and later falsely claimed catastrophic losses to explain the disappearance of funds.
Edward Sapienza, Jr., also of New York, NY, received the same $240,000 penalty. WSL, the forex investment firm, was ordered to pay over $10.4 million in restitution and disgorgement, and more than $10.8 million in civil monetary penalties. All three—Ross, Sapienza, and WSL—are barred from trading on CFTC-regulated markets and registering with the agency.
Additionally, Stephen E. Moore, of New York, NY, and his company ItradeCurrency USA, LLC (ITC) were subject to default judgments. They are required to pay over $1.3 million in restitution and $960,000 in penalties, shared jointly with other co-defendants. The court found that Moore and ITC engaged in fraudulent practices related to the illegal forex scheme.
The court acknowledged that Ross and Sapienza are already jointly and severally liable for $6,800,951 in restitution due to a parallel criminal case, U.S. v. Ross, et al., and did not impose additional restitution in this civil matter.
Source: CFTC.gov
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