The US Commodity Futures Trading Commission (CFTC) has filed a complaint in the US District Court for the Western District of Wisconsin charging defendants Jacob Juma Omukwe, JadeFX Ltd (JadeFX) and Jade Investments Group, LLC (Jade), with operating a fraudulent off-exchange retail foreign currency (forex) scheme through the website www.jadefx.com. None of the defendants has ever been registered with the CFTC.
On the same day the complaint was filed under seal, March 2, 2011, US District Court Judge William M.Conley entered a restraining order, also under seal, freezing defendants’ assets and prohibiting the destruction of books and records.
The CFTC complaint alleges that, from at least June 2009 through the present, Omukwe, Jade FX and Jade fraudulently solicited and misappropriated more than USD3.2 million from more than 500 customers in the United States and throughout the world to trade forex. Contrary to Omukwe’s representations, only a fraction of customer funds were traded and most of the funds were misappropriated. In addition, the complaint alleges that JadeFX and Omukwe failed to register as a retail foreign exchange dealer (RFED) and associated person (AP) of an RFED, respectively, as required under the Commodity Exchange Act (CEA) and CFTC regulations.
Defendants allegedly made explicit but false guarantees on the JadeFx website including that: all customer funds are traded in forex; customer funds are completely segregated from JadeFX’s operating accounts; and customer funds were protected from bankruptcy.
Instead of segregating customer money into separate accounts, Omukwe allegedly pooled all customer funds together into bank accounts that he exclusively controlled. From these bank accounts, only a portion of customer money was traded in forex. Omukwe allegedly misappropriated the remaining funds to pay for personal and business expenses, including the operational costs of JadeFX and Jade.
A consent order of permanent injunction entered by Judge Conley on March 8, 2011, finds that Omukwe, JadeFX and Jade Investments Group violated the CEA by defrauding customers in connection with foreign exchange transactions. It also finds that JadeFX and Omukwe violated the CEA and Commission regulations by failing to register as RFEDs and that Omukwe violated the CEA and Commission regulations by failing to register as an associated person of an RFED.
Judge Conley’s order permanently prohibits Omukwe, JadeFX and Jade Investments Group from further violations of federal commodity laws. The consent order also permanently prohibits defendants from engaging in any commodity-related activity and from registering with the CFTC in any capacity. Finally, the order requires Omukwe, JadeFX and Jade Investments Group to pay restitution to defrauded customers, disgorge ill-gotten gains and pay a civil monetary penalty. The order leaves the amounts of restitution, disgorgement and civil monetary penalties to be determined at a later date as part of the CFTC’s ongoing civil litigation.
