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Ohio defendants charged with multi-million dollar futures Ponzi scheme

Ohio defendants charged with multi-million dollar futures Ponzi scheme

The US Commodity Futures Trading Commission has charged Enrique F. Villalba, Jr., of Cuyahoga Falls, Ohio, and his firm, Money Market Alternative, with operating a multi-million dollar commodity futures Ponzi scheme.

The CFTC complaint, filed on 29 March 2010 in the US District Court for the Northern District of Ohio, charges that, beginning in at least 1996 and continuing through at least November 2009, Villalba and MMA operated a USD37.5m fraudulent scheme.

The complaint alleges that Villalba and MMA misappropriated at least USD3m in investor funds to finance Villalba’s coffee business and to purchase real estate among other things.

In addition, the defendants allegedly used more than USD7m of investor funds to make Ponzi payments to new and existing investors.

Specifically, the complaint charges that Villalba fraudulently solicited funds from members of the general public to trade futures predominantly related to the S&P 500 and opened a futures trading account in the name of MMA as early as 1998. Villalba and MMA deposited more than USD23.2m in this account and had net losses of more than USD17m.

Despite massive trading losses, Villalba and MMA allegedly sent monthly, quarterly and annual statements to investors that showed purported consistent profits. Villalba and MMA also made numerous verbal statements to investors and prospective investors about the purported successful performance of their futures trading. Most, if not all, of these written and oral statements were false, the complaint alleges.

Finally, from at least 2000 through 2008, the defendants allegedly created and provided at least one investor with sporadic fabricated monthly futures commission merchant statements for several different purported accounts.

In the continuing litigation, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties and a permanent injunction prohibiting further violations of the federal commodities laws.

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