The Commodity Futures Trading Commission today announced that the U.S. District Court for the Northern District of Illinois entered a consent order on March 21, 2022 for a permanent injunction, monetary sanctions, and equitable relief against defendants Dro Kholamian of Barrington, Illinois and his company, Blue Star Trading, LLC (Blue Star), which had an office in Park Ridge, Illinois.
The consent order resolves a CFTC action filed on November 30, 2018 [See CFTC Press Release No. 7857-18] alleging solicitation fraud, misappropriation of client funds, and failing to register with the CFTC as a commodity trading advisor and an associated person.
The order requires Kholamian and Blue Star to pay $227,000 in restitution to victims of their scheme and to pay a $150,000 civil monetary penalty. The order also permanently prohibits the defendants from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged, and imposes permanent registration and trading bans.
Case Background
The order finds that from January 2013 through November 2018, the defendants fraudulently solicited and accepted $995,000 from clients for futures and/or forex trading through accounts that Kholamian and Blue Star managed. Kholamian sought out some clients through his connection with his Armenian church and social contacts of Armenian heritage. The defendants returned $768,000 to their clients and misappropriated $227,000 of their funds, using those funds to pay other clients in a manner akin to a Ponzi scheme and to pay for Kholamian’s personal and business expenses.
Parallel Criminal Action
In a separate action, the U.S. Attorney’s Office for the Northern District of Illinois indicted Kholamian, on nine counts of wire fraud. The criminal charges included the same scheme to defraud forex and commodity clients as charged in the CFTC’s case as well as a scheme involving other fraudulent loans Kholamian offered. Following a guilty plea to one count of wire fraud, on September 3, 2021, Kholamian was sentenced to 48 months in prison and ordered to pay $755,000 in restitution. [See United States v. Dro Kholamian, 20 CR 530 (N.D. Ill.)].
The CFTC appreciates the cooperation and assistance of the U.S. Attorney’s Office for the Northern District of Illinois and the Federal Bureau of Investigation.
The Division of Enforcement staff members responsible for this action are Heather Dasso, Susan B. Padove, Elizabeth M. Streit, Scott R. Williamson, and Robert T. Howell.
CFTC’s Forex Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories and Articles that provide the warning signs of fraud, including the Foreign Currency Trading (Forex) Fraud Advisory, which alerts customers to forex fraud and lists simple ways to spot forex scams.
The CFTC also strongly urges the public to verify an individual or company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that individual or 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), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected, paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.
RELATED LINKS
