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CFTC Charges Unregistered Commodity Pool Operator And Its Principal With Fraud And Misappropriation

Date 14/02/2020

The Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the Eastern District of Missouri against Joshua Christian McDonald and his company, Perfection PR Firm LLC (PPR), which operated out of California and Tennessee. The complaint charges McDonald and PPR with fraud and misappropriation related to an off-exchange foreign currency (forex) trading scheme in which they solicited funds totaling at least $440,000 from at least 12 investors, including multiple residents of Missouri.

According to the complaint, the defendants pooled investors’ funds in bank and trading accounts in their own names. In soliciting funds for and operating the pooled investment vehicle, PPR acted as an unregistered commodity pool operator and McDonald acted as an unregistered associated person of PPR.

The complaint further alleges that beginning in at least August 2017, the defendants falsely represented to prospective investors that McDonald was profitably trading forex and promised investors their accounts would grow between 10% and 50% in value per month, among other claims. As alleged in the complaint, however, McDonald did not in fact trade forex as successfully as he claimed and actually lost money. Moreover, the complaint alleges the defendants misappropriated investors’ funds and transferred them into digital asset accounts in McDonald’s name, or used them to pay McDonald’s personal expenses. According to the complaint, investors have lost most or all of their invested funds as a result of the defendants’ fraud and misappropriation.

In its continuing litigation, the CFTC seeks full restitution to defrauded clients, disgorgement of any ill-gotten gains, a civil monetary penalty, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity Exchange Act, as charged.

Related Criminal Indictment

On January 29, 2020, the United States Attorney for the Eastern District of Missouri indicted McDonald on four counts of wire fraud. [See U.S. v. McDonald, 4:20-CR-70 SRC SPM]

The CFTC appreciates the assistance of the United States Attorney’s Office for the Eastern District of Missouri, the Federal Bureau of Investigation, the Securities Division of the Office of the Missouri Secretary of State, and the Securities Division of the Office of the Mississippi Secretary of State.

The Division of Enforcement staff members responsible for this action are Dmitriy Vilenskiy, Christine Ryall, Paul Hayeck, and former staff member Greta Gao. 

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CFTC’s Commodity Pool Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud involving individuals and firms, often unregistered, offering investments in commodity pools.

The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.

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