PORTLAND, OR – January 11, 2007 – Russell Cline of Portland, Oregon, has been ordered to pay over $33 million in restitution and penalties for orchestrating a massive fraud involving illegal foreign currency (forex) trading, the U.S. Commodity Futures Trading Commission (CFTC) announced today.
The order, entered by the Honorable Garr King of the United States District Court for the District of Oregon, stems from a joint enforcement effort with the Oregon Department of Consumer and Business Services, the Federal Bureau of Investigation, and the Department of Justice. Cline and others were initially sued by the CFTC and the State of Oregon on May 7, 2003, for their involvement in the fraudulent scheme.
According to court documents, Cline and his company, Orion International, Inc., began soliciting over $40 million from customers in December 1998, promising participation in a foreign currency fund. Cline fraudulently misrepresented the profits and risks associated with forex trading, selling illegal off-exchange forex options and futures contracts. He then misappropriated a significant portion of the customer funds for personal expenses, including purchasing homes, cars, and funding entertainment, as well as compensating others involved in the scheme.
The court’s order mandates Cline to make restitution of $16,567,905 to defrauded investors – mirroring a previous judgment in the criminal case U.S. v. Cline (No. CR-04-205-KI). A civil penalty of the same amount, $16,567,905, has also been imposed, reflecting the funds Cline personally misappropriated.
Furthermore, Cline is permanently prohibited from directly or indirectly trading commodity futures contracts, options, and foreign currency transactions subject to CFTC jurisdiction, as well as Oregon securities. The scheme involved providing customers with false account statements and manipulating Orion’s website with misleading information regarding trading profits, market conditions, and account balances.
Cline also utilized over $13 million in customer funds to pay fictitious profits to other investors, masking the true financial state of the operation. Any funds Cline did use for actual trading resulted in net losses. A federal grand jury in Portland indicted Cline in May 2004 on 39 counts of mail fraud, wire fraud, and money laundering.
“This was a massive financial fraud,” stated Gregory Mocek, the CFTC’s Director of Enforcement. “We are hopeful that all of those involved in the illegal activity will see that their deceptive business models are becoming less attractive.”
Source: CFTC.gov
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