(CN) – Foreign exchange traders who lost $552,000 of investors’ money and lied about it are liable for more than $5 million in civil penalties, a federal judge ruled.
The U.S. Commodity Futures Trading Commission filed a federal complaint against Frisco, Texas-based Total Call Group, and its unregistered operators Craig Poe and Thomas Thurmond, in September 2010.
Neither Poe, Thurmond nor Total Call Group filed answers to the lawsuit, and the commission moved for default judgment in March 2011.
U.S. Magistrate Judge Don Bush recommended granting that motion, as well as an injunction, in May 2011.
The Sherman, Texas, court also suggested civil monetary penalties of $3.38 million against Poe and $1.69 million against Thurmond.
In the absence of any objection, U.S. District Judge Richard Schell confirmed and adopted the recommendations on March 30.
The commission claimed that, between 2006 and 2008, at least four customers lost $808,000 trading off-exchange foreign currency contracts, known as “forex” trades, with the defendants.
Among the lies that Thurmond told to solicit these trades, he said Poe had been trading forex and living off the income for over four years, according to the commission.
“Thurmond also falsely represented that he and Poe had personally provided over $1 million to Total Call Group,” the commission said in the 2011 motion for default judment. “From January 2005 through December 2008, Poe and Thurmond provided Total Call Group with, at most, a total of less than $45,000.”
The complaint further alleged that, from September through December 2008, Poe violated the Commodity Exchange Act by distributing 25 false profit reports to at least three of Total Call Group’s customers.
“In sum, from early 2007 through November 2008, the defendants sustained trading losses and incurred trading fees totaling approximately $552,000 trading forex,” according to the 2011 motion. “Almost all of these losses and fees were incurred during the period from August through November 2008.”
The commission says the defendants also withdrew $129,000 from the trading accounts, claiming they were entitled to the money as service fees. But the fees were based on their reports of false profits.