A federal court has ordered William Thomas Caniff and his company, Berkley Capital Management, LLC (BCM), to pay over $6.2 million in restitution and penalties for a fraudulent binary options scheme, the Commodity Futures Trading Commission (CFTC) announced Friday. The judgment, entered by the U.S. District Court for the Northern District of Illinois on August 29, includes a $2,598,632 restitution order and a $3.6 million civil monetary penalty against Caniff and BCM.
Arie Bos, Caniff’s partner residing in the Netherlands, was also hit with a consent order on September 14, making him jointly and severally liable for the $2,598,632 restitution, in addition to a separate $500,000 civil monetary penalty. The charges stem from a CFTC complaint filed in May 2019 alleging fraud and misappropriation.
According to court findings, Caniff and Bos formed BCM in January 2016, offering investment pools to trade foreign exchange binary options through the North American Derivatives Exchange (NADEX). Caniff, a convicted felon, allegedly concealed his criminal history when opening a trading account with NADEX by providing false statements.
From February 2016 through September 2018, Bos solicited 58 investors—all located in the Netherlands except for one U.S. resident—who contributed over $3.3 million to the investment pools. While claiming to trade these funds at NADEX, Caniff instead misappropriated them, diverting approximately $1.2 million to himself and $1.1 million to Bos. To cover up the theft, Caniff fabricated trading results which Bos then falsely reported to investors, exaggerating pool values and reporting profits during months with no actual trading activity. In 2016, Bos claimed a fund value of $5.5 million despite an account balance of under $278,000, and falsely reported a 10% return when the fund actually experienced losses.
The court found Bos committed fraud by ignoring multiple red flags and failing to verify BCM’s reported profits with NADEX, and also for issuing false account statements to investors. Caniff was also found to have made false statements on his NADEX account application.
Caniff currently faces criminal charges in two separate cases. A jury trial is scheduled in the Southern District of Ohio on October 31, 2022, in United States v. Caniff, where he is accused of wire fraud and money laundering. Another criminal case, United States v. Caniff, is also pending in the Northern District of Illinois, stemming from the false statements made on his NADEX account application. The CFTC warns that court orders for restitution do not guarantee recovery of lost funds.
Source: CFTC.gov
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