In a development in Texas, the federal court has fined two convicts a total of $360,000 USD in respect to solicitation of funds from the public over a fraudulent scheme. The amount raised from the public investors since January 2017 is yet to be revealed.
The U.S Commodities and Futures Trading Commission (CFTC) released a statement earlier on Wednesday July 10th 2019 confirming Morgan Hunt and Kim Hercroft have been fined about $400,000 USD and banned from trading for life after being convicted of Bitcoin (BTC) solicitation fraud. Each of the convicts will pay $180,000 USD in civil monetary penalties and restitution in connection with activities impersonating the commission itself.
The case, decided by a Federal Court in Texas found out that Hunt had been operating as a business –Diamond Trading Investments House – and Kim doing business as First Options Trading. The two firms cons and frauds investors and members from the public to invest their BTC tokens with them. The funds are then invested in several investment vehicles including forex, options and diamonds.
Judge Reed C. O’Connor granted a motion for default judgement in an Order and Default Judgment (Order) filed June 28, 2019. Hercroft and Morgan are expected to pay restitution and a civil monetary of $180,000 USD each. The statement from CFTC reads,
“In addition, the Order imposes permanent trading and registration bans on Defendants, and permanently enjoins them from further violations of the Commodity Exchange Act and CFTC Regulations, as charged.”
The Director of Enforcement at CFTC, James McDonald urged the public to remain vigilant on such scams and fraudulent schemes. He calls on the public the exercise caution before buying and selling of cryptocurrencies as the number of scams increase on the internet and social media. He further comments,
“The CFTC reiterates that it does not collect taxes or fees, and will continue to educate the investing public and aggressively pursue misconduct in this arena.”
Criminals Use CFTC’s Seal Of Approval In The Fraudulent Scheme
The defendants were further charged with impersonating the trading commission and providing false information and misrepresentation to their customers. All this was dome in a bid to make the scheme look credible and real to the public.
The defendants further provided fake account statements, sending faked documents ostensibly sent out by the General Counsel at CFTC, using the seal of the commission to trick the public and impersonating an investigator from the commission.
They mostly used social media – Facebook and emails – to conduct the scheme and promise false gains to unknowing investors. They lied and misrepresented themselves and their track record as competent fund managers and traders. Furthermore investors were tricked into paying a “withdrawal tax to the CFTC”.
The statement confirmed that the investors will not be able to recover their investment as Hercroft and Hunt do not have the capacity to pay.
The CFTC recently launched an action against Control-Target Ltd. for participating in a scam involving over 23,000 BTC, approximately $270 million USD at current rates.