Miami, FL – Russell Diaz and three associates have been permanently banned from commodity trading following a CFTC investigation into a fraudulent foreign currency scheme. The U.S. Commodity Futures Trading Commission obtained a permanent injunction order against Diaz, Shad Thomas Haynes, and Robert LaRocca, as well as their companies, Next Financial Services Unlimited, Inc. and New World Trading, LLC, on January 11, 2006, in the U.S. District Court for the Southern District of Florida.
The case, originating from a complaint filed on June 21, 2004, alleges the defendants fraudulently solicited nearly $3.4 million from at least 199 retail customers, both in the United States and abroad, to invest in illegal, off-exchange foreign currency (forex) options contracts. The amended complaint, filed June 20, 2005, added Diaz and Haynes as defendants, holding them liable for the firms’ fraudulent activities.
According to the CFTC, between September 2003 and June 2004, the defendants misrepresented the potential profits and risks associated with forex options trading. They allegedly told prospective customers there was “limited risk” and potential for returns of 300% to 400%, despite evidence that 93% of Next Financial and New World customers lost substantially all of their investments, totaling at least $3 million in losses. The firms earned commissions of at least $845,300 and $473,500, respectively, through these customer trades.
The court order mandates that Next Financial and Russell Diaz, as the controlling person responsible for Next Financial’s daily operations, pay over $1.8 million in restitution to defrauded customers. Next Financial is also required to pay a $1 million civil monetary penalty, and Diaz must pay an additional $250,000 penalty. New World and Shad Thomas Haynes, the controlling person of New World, must pay nearly $1.3 million in restitution, along with a $1 million penalty for New World and a $125,000 penalty for Haynes. Robert LaRocca is also subject to the permanent ban on commodity-related activity.
The CFTC’s Division of Enforcement, led by Michael J. Otten, Gretchen Lowe, and Vince McGonagle, was responsible for the investigation and prosecution of this case. The order effectively bars all defendants from any future involvement in commodity trading or soliciting investments in commodity futures and options.
Source: CFTC.gov
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