Stephanie Ann Gallitano, of Plantation, Florida, faces charges of fraud related to foreign currency (forex) options trading, according to a complaint unsealed by the U.S. Commodity Futures Trading Commission (CFTC). The complaint, filed in the Southern District of Florida, alleges that Gallitano and her companies, Financial Risk International, Inc. (FRI) and Financial Risk Management, Inc. (FRM), engaged in fraudulent solicitation practices between March and June 2004.
The CFTC alleges that FRI employees, including Gallitano, targeted at least 257 retail investors, enticing them to open accounts and speculate in forex options through both registered and unregistered firms. Prosecutors claim sales pitches relied on false promises of high profits, minimal risk, and limited-time investment opportunities. Specifically, Gallitano and FRI allegedly misrepresented that substantial profits were likely, risks were low, opportunities were fleeting, prior customers had profited handsomely, and losses could be recovered with further investment. Gallitano also allegedly presented herself as a trading expert.
The complaint details that these claims were made while simultaneously failing to disclose the substantial risks inherent in forex options trading, as well as FRI’s consistently losing track record. The CFTC alleges that nearly 100% of FRI’s customers lost money during the period in question, resulting in over $3 million in total losses.
FRI is accused of being principally liable for the fraudulent actions of its employees. Gallitano is named as a controlling person liable for FRI’s fraud, and both Gallitano and FRM are accused of aiding and abetting the firm’s fraudulent activities.
On December 4, 2006, Judge Joan A. Lenard of the U.S. District Court for the Southern District of Florida issued a statutory restraining order, freezing the defendants’ assets and preventing the destruction of company records. A preliminary injunction hearing was scheduled for January 22, 2007. The CFTC is seeking preliminary and permanent injunctions, restitution for customer losses, and monetary penalties as part of its ongoing litigation.
The case is being prosecuted by Matthew Elkan, Kathleen Banar, Lacey Dingman, Richard Glaser, and Richard Wagner of the CFTC’s Division of Enforcement. The investigation originated in Miami, Florida.
Source: CFTC.gov
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