DENVER, CO – Shawon McClung, formerly of Denver, Colorado, and Flint-McClung Capital LLC (FMC) have been ordered to pay $6.001250 in restitution and penalties for operating a fraudulent foreign currency (forex) Ponzi scheme, according to a U.S. District Court order entered on April 18, 2012.
McClung and FMC were jointly and severally held liable for $1,701,250 in restitution and a $4.3 million civil monetary penalty. The court also permanently banned them from engaging in trading and registration activities related to commodities.
The ruling follows a June 30, 2011, enforcement action brought by the U.S. Commodity Futures Trading Commission (CFTC) alleging fraud and misappropriation. The CFTC accused McClung and FMC of soliciting at least $2.4 million from 20 customers beginning in March 2010, by falsely promising successful forex trading.
According to the court order, McClung and FMC misrepresented the size and segregation of customer funds, claiming to manage a $300 million pool of participant funds and utilizing $500 million in proprietary funds for trading. However, the CFTC found that little to no actual trading occurred on behalf of the customers.
The investigation revealed that McClung misappropriated at least $1,701,250 of the solicited funds for personal use, including approximately $70,000 spent on automobiles. These funds were also used to make payments to earlier investors, creating the appearance of profits, and to unrelated individuals.
The CFTC acknowledged the assistance of the National Futures Association in the investigation. The case was led by CFTC staff members Alison B. Wilson, Heather Johnson, Boaz Green, Gretchen L. Lowe, and Vincent A. McGonagle.
Source: CFTC.gov
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