WASHINGTON, DC – July 10, 2019 – A Texas federal court has ordered Morgan Hunt, of Arlington, Texas, and Kim Hecroft, of Baltimore, Maryland, to pay nearly $400,000 in penalties and restitution for a fraudulent scheme involving Bitcoin and other trading products. The judgment, filed on June 28, 2019, by Judge Reed C. O’Connor of the U.S. District Court for the Northern District of Texas, stems from a lawsuit brought by the Commodity Futures Trading Commission (CFTC).
According to the court findings, Hunt, operating as Diamonds Trading Investment House, and Hecroft, operating as First Options Trading, engaged in a scheme to solicit Bitcoin from the public with false promises of investment returns. Between January 2017 and September 28, 2018, the defendants used Facebook and email to falsely claim customer funds would be invested in leveraged foreign currency contracts (forex), binary options, and diamonds.
The CFTC alleged and the court found that Hunt and Hecroft misrepresented their trading experience, falsely claimed customers needed to pay a tax to the CFTC before withdrawing profits, and misappropriated customer funds. The scheme involved providing fabricated account statements, impersonating a CFTC investigator, and distributing forged documents bearing the CFTC’s official seal.
James McDonald, CFTC Director of Enforcement, warned, “Retail customers should exercise caution before buying or trading cryptocurrencies on unfamiliar Internet websites or social media.” He reiterated that the CFTC does not collect taxes or fees and will continue to pursue misconduct in the digital currency space.
The court ordered Hunt and Hecroft each to pay restitution and a $180,000 civil monetary penalty. Additionally, both defendants are subject to permanent trading and registration bans, and are permanently prohibited from violating the Commodity Exchange Act and CFTC Regulations. The CFTC cautioned that victims may not fully recover their losses due to the potential lack of assets held by the defendants.
The case was led by the CFTC Division of Enforcement Virtual Currencies Task Force, with Trevor Kokal, David C. Newman, R. Stephen Painter Jr., Lenel Hickson Jr., and Manal M. Sultan as key staff members.
Source: CFTC.gov
Related Federal Cases
- Cathy Harvill and William Harvill, Conspiracy to Commit Health Care Fraud, Texas 2014 · Kansas
- Monica Bunch, SNAP Fraud, Texas 2013 · Texas
- John Q. A. Webb, Jr., Conspiracy to Commit Health Care Fraud, Texas 2014 · Texas
- Marcus Brian Curry, Mail Fraud, Texas 2014 · Montana
- David E. Dorman, Mail Fraud, Texas 2023 · Texas
