SAN JOSE, Calif. – Victor Yu of San Jose, California, has been ordered to pay nearly $3.23 million in restitution and penalties for defrauding over 100 individuals in a foreign currency (forex) trading scheme, the U.S. Commodity Futures Trading Commission (CFTC) announced today, March 27, 2013.
Yu, along with his company VFRS, LLC, was hit with a default judgment and permanent injunction issued by Judge Yvonne Gonzales Rogers of the U.S. District Court for the Northern District of California on March 26, 2013. The case originated from a CFTC complaint filed on July 26, 2012, alleging fraud and failure to register as a Commodity Trading Advisor (CTA).
According to the court order, Yu and VFRS falsely advertised their forex trading software as “extremely safe,” claiming it would prevent clients from experiencing significant losses. They also allegedly misrepresented the software’s performance, stating it had consistently generated positive returns and accurately predicted market activity dating back to the 1920s.
Between 2009 and the present, Yu and VFRS convinced clients to invest over $5 million in forex accounts. However, clients ultimately lost almost $2.15 million, while Yu and VFRS pocketed over $270,000 in service fees. The court found that Yu acted as an unregistered CTA by requesting clients’ login credentials to directly manage their trading accounts.
The order mandates Yu and VFRS to pay $2.15 million in restitution to defrauded clients, $270,000 in disgorgement to return ill-gotten gains, and a civil penalty exceeding $800,000. Both Yu and VFRS are permanently banned from engaging in forex trading and from registering with the CFTC in any capacity, and are prohibited from future violations of federal commodities law.
The CFTC’s Division of Enforcement, led by Robert Howell, Jennifer Smiley, Joseph Patrick, Susan Gradman, Scott Williamson, Rosemary Hollinger, and Richard Wagner, investigated the case.
Source: CFTC.gov
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