WASHINGTON, D.C. – Michel Geurkink, a citizen of the Netherlands, is facing significant penalties following a CFTC enforcement action for his involvement in a fraudulent foreign currency (forex) trading scheme. The U.S. Commodity Futures Trading Commission obtained a Consent Order against Geurkink, along with IB Capital FX, LLC and Emad Echadi, requiring them to jointly pay $35 million in restitution to approximately 1,850 defrauded customers and a $420,000 civil monetary penalty.
The scheme involved soliciting and accepting over $50 million from customers in the United States and globally for off-exchange margined retail forex trading without being properly registered with the CFTC, a violation of federal regulations. Judge Lee Yeakel of the U.S. District Court for the Western District of Texas entered the Order on November 16, 2016.
According to the Order, between January 1, 2012, and September 18, 2012, the defendants returned approximately $51.6 million to customers through redemptions, refunds, and other payments. However, this left the defendants with an illicit gain of $35 million, stemming from their failure to register as required by the Commodity Exchange Act (CEA).
IB Capital, a New Zealand-based company, and its principals Geurkink and Echadi are also facing criminal prosecution in the Netherlands by the Dutch Public Prosecutor’s Office for related fraudulent activities. The CFTC filed its initial enforcement action against the defendants on November 9, 2015.
The CFTC emphasized that operating an unregistered entity poses a serious threat to the integrity of the financial industry. While the Order mandates restitution, the agency cautioned that victims may not fully recover their losses due to potential limitations in the defendants’ assets.
The CFTC received assistance in the investigation from several international regulatory bodies, including authorities in Australia, the U.K., Hungary, New Zealand, and the Netherlands.
The case was led by CFTC staff members Kyong J. Koh, Elizabeth C. Padgett, Mary Q. Lutz, Timothy J. Mulreany, and Paul G. Hayeck.
Source: CFTC.gov
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