Whileon Chay, of New York City, is facing charges of fraud and misappropriation following a CFTC enforcement action filed in the U.S. District Court for the Southern District of New York on April 8, 2013. Chay, along with his company 4X Solutions, Inc., allegedly operated a $4.8 million foreign currency (forex) trading Ponzi scheme.
According to the CFTC complaint, Chay and 4X fraudulently solicited funds from at least 19 investors, promising annual returns of 24 to 36 percent. They falsely claimed the ability to generate profits regardless of market conditions, touting a history of success and portraying 4X as a “safe haven” for investors. The CFTC alleges these claims were demonstrably false.
The investigation revealed that Chay lost approximately $2 million trading forex in company accounts. He then allegedly misappropriated $2.8 million of investor funds to cover operating costs, pay earlier investors (creating the illusion of profits), and finance personal expenses. These expenses included luxury resort stays, high-end dining, limousine services, and exotic car rentals.
To conceal the losses and misappropriation, Chay is accused of issuing false monthly account statements and checks that falsely indicated trading profits and investment returns. The CFTC asserts that virtually all payments to investors were funded by money contributed by new participants—a hallmark of a Ponzi scheme.
The CFTC is seeking restitution for defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the Commodity Exchange Act. The case is being pursued by CFTC staff members Kara Mucha, August A. Imholtz III, James Garcia, Michael Solinsky, Gretchen L. Lowe, and Vincent A. McGonagle.
Source: CFTC.gov
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