(CN) - A Texas-based investment firm and its principals owe $1.1 million in sanctions for fraudulently funding a foreign-exchange trading pool, the Commodity Futures Trading Commission ruled.
The Wednesday order settles charges that PassThrough Investments, Stephen Brantley and Dwayne Dawson, all of Spring, Texas, fraudulently solicited and accepted more than $2.6 million from at least 60 civilians to participate in an off-exchange foreign-currency pool that traded on a leveraged or margined basis.
Each defendant must pay $140,000 in civil penalties and $701,617 in restitution, jointly and severally. They all also now face permanent trading and registration bans.
When soliciting customers in 2010, Brantley and Dawson omitted material facts and made material misrepresentations as to the likelihood and amount of profits, according to the commission. The pool allegedly operated as a Ponzi scheme by paying "returns" to customers with other investments.
"Brantley and Dawson provided actual and prospective PTI customers with PTI account agreements and payout schedules that promised returns of at least 200% and represented that the customer's funds were 'in the market,'" the order states.
In 2010 face-to-face meetings, Dawson told prospective investors that the pool operators found a "sweet spot" in the forex market that allowed them to "make money if the market goes up or goes down," the order states. Dawson allegedly said the success would continue until "Jesus returns," convincing the investors to open a joint account with PTI.
The CFTC found that Brantley and Dawson did little to nothing to confirm that the pool operators have been successful at forex trading. It found that they failed to disclose that the pool paid PTI fees of 20 percent of the amount of deposit for each new PTI customer.
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