Court Grants Restraining Order Freezing Defendants’ Assets and Protecting Books and Records
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of an enforcement action in the U.S. District Court for the Western District of North Carolina on July 30, 2014, charging Defendants Edwin A. Vasquez of Arden, North Carolina, and Vasquez Global Investments, LLC (VGI), a North Carolina company, with misappropriation, solicitation fraud, and issuing false statements in connection with the operation of an unregistered commodity trading pool.
On August 1, 2014, Federal District Judge Martin Reidinger issued a restraining Order that freezes Vasquez’s and VGI’s assets, protects books and records, and schedules a hearing on August 15, 2014, to consider the CFTC’s request that the court preliminarily enjoin Vasquez and VGI from future violations of the federal commodity laws, as alleged.
According to the CFTC Complaint, beginning in August 2011, Vasquez, acting individually and through VGI, defrauded and deceived at least 19 participants who invested at least $583,491 in a commodity pool commonly known as the VGI pool.
Specifically, the Complaint alleges that Vasquez told prospective pool participants that he was a successful trader and that the VGI pool was a “no risk” investment. The Complaint further alleges that, of the $583,491 solicited and accepted from pool participants, Vasquez and VGI lost $65,374 trading commodity futures and returned $186,561 to pool participants as purported profits in the manner of a Ponzi scheme. In addition, Vasquez and VGI allegedly misappropriated the remaining $331,556 by using those funds to pay for VGI’s operating costs and for Vasquez’s personal expenses, including travel, restaurants, rent, cash withdrawals, and retail purchases.
Vasquez did not disclose his trading losses and misappropriation and, instead, issued false statements to the pool participants regarding the profitability and value of their shares of the pool, according to the Complaint. Vasquez and VGI are also charged with commingling pool participant funds and with registration violations.
In its continuing litigation against the Defendants, the CFTC seeks a civil monetary penalty, payment of restitution of losses to customers, disgorgement of ill-gotten gains, trading and registration bans, and preliminary and permanent injunctions against further violations of the federal commodities laws, as charged.
The CFTC appreciates the assistance of the North Carolina Department of the Secretary of State, Securities Division.
The CFTC Division of Enforcement staff members responsible for this case are Elizabeth N. Pendleton, Joseph Patrick, Scott Williamson, and Rosemary Hollinger.
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CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud that involves individuals and firms, often unregistered, offering investments in commodity pools.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.