DALLAS (CN) – A father and son must pay $9.3 million for their roles in a $30 million foreign currency scam, a federal judge ruled.
The Commodity Futures Trading Commission had sued Growth Capital Management LLC and Robert Mihailovich Sr. and Jr., both of Rockwall, Texas. U.S. District Judge Jane Boyle ordered them to pay $3,475,112 in restitution, to disgorge $389,006 in ill-gotten gains, and to pay a civil penalty of $5,440,000.
The CFTC said in a statement that “Mihailovich Sr. was convicted and incarcerated on federal wire fraud charges, served 27 months, and while on a three-year supervised release, fraudulently solicited and accepted more than $30 million from approximately 93 customers to open managed trading accounts. The complaint also alleged that Mihailovich Jr., at the time of GCM’s initial registration, failed to disclose Mihailovich Sr.’s involvement with GCM, and failed to disclose in CFTC registration filings that his father was a controlling principal of GCM.”
In her ruling, Judge Boyle blasted Milhailovich Sr. for bad faith.
“Defendant Mihailovich, Sr. failed to attend a number of Court-ordered hearings, repeatedly failed to abide by Court Orders, failed to communicate with Plaintiff CFTC, failed to appear or respond to his scheduled deposition, and failed to respond to written discovery,” Boyle wrote. All this resulted in a default judgment against him.
The CFTC already had obtained a consent order against Mihailovich, Jr., imposing a $40,000 civil penalty, a 10-year CFTC registration ban and a five-year trading ban, according to the agency’s statement.