NEW YORK, NY – February 8, 2016 – Whileon Chay, of New York City, has been ordered to pay a combined $11,000,904 in penalties and disgorgement for operating a foreign currency (forex) trading Ponzi scheme, the U.S. Commodity Futures Trading Commission (CFTC) announced today.
U.S. District Judge Richard M. Berman of the Southern District of New York, issued the order on January 29, 2016, following a default judgment entered on April 17, 2015, against Chay and his firm, 4X Solutions, Inc. The judgment found that Chay and 4X fraudulently solicited $4.8 million from at least 19 investors by falsely promising annual returns of 24% to 36% and claiming consistent profitability regardless of market conditions.
According to court findings, Chay misrepresented the risks associated with forex trading, asserting that 4X had not experienced a losing month in 14 years and providing a “safe haven” for investors. However, the court determined that Chay lost approximately $1,985,754 trading forex and then misappropriated $2,745,226 to cover personal expenses, trade securities, fund company operations, and falsely inflate returns paid to investors – the hallmarks of a Ponzi scheme.
Judge Berman ordered Chay and 4X Solutions to jointly and severally disgorge the $2,745,226 in misappropriated funds and pay a civil monetary penalty of $8,235,678 – an amount three times the funds they illegally diverted. The CFTC notes that while disgorgement orders are obtained, victims may not fully recover their losses due to a lack of available assets from the defendants.
The case was led by CFTC Division of Enforcement staff members Kara Mucha, August A. Imholtz III, James A. Garcia, Michael Solinsky, Charles D. Marvine, Rick Glaser, and Gretchen L. Lowe. The CFTC urges anyone with information about potential commodity trading fraud to contact its Division of Enforcement via its toll-free hotline at 866-FON-CFTC.
Source: CFTC.gov
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