Oshkosh, Wisconsin resident Timothy A. Sack and his company, Southwest Services, L.L.C., are facing charges of forex fraud following a civil enforcement action filed by the Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the Eastern District of Wisconsin. The complaint, filed October 7, 2020, alleges a pattern of unregistered activity and regulatory violations related to retail foreign currency trading.
Southwest Services, also known as South West Services, LLC, is accused of operating as a retail foreign exchange dealer (RFED) without registering with the CFTC, a key requirement for firms engaging in this type of financial activity. The CFTC further alleges the company failed to provide customers with legally mandated risk disclosure statements and did not maintain accurate books and records of its transactions.
Timothy Sack, as the sole managing member of Southwest Services, is also charged with failing to register as an associated person of an RFED. The CFTC asserts that Sack, as the controlling individual behind the company, is liable for these violations of the Commodity Exchange Act and related CFTC regulations.
According to the complaint, between August 2016 and April 2018, Southwest Services offered and executed financed retail foreign currency transactions with U.S. customers who did not qualify as eligible contract participants. These transactions involved currencies like Vietnamese Dong and Iraqi Dinar and did not result in the delivery of currency within the legally required two-day timeframe. The company reportedly promoted these transactions through its website, YouTube videos, and direct solicitations.
The CFTC emphasizes the importance of verifying a company’s registration status before investing, warning potential customers to exercise caution when dealing with unregistered firms. Information on a company’s registration can be found through the NFA BASIC system.
The case is being prosecuted by Timothy J. Mulreany, Kassra Goudarzi, George Malas, Hillary Van Tassel, and Paul G. Hayeck of the CFTC’s Division of Enforcement. Penalties sought have not been disclosed at this time.
Source: CFTC.gov
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