The US Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action charging Oscar Hernandez of Miami, Fla., and his Miami-based companies, Midway Trading Company, LLC and Conquest Investment Group, Inc., with operating a USD3 million commodity pool Ponzi scheme and misappropriating participants’ funds. None of the defendants has ever been registered with the CFTC.
The CFTC’s complaint, filed on 30 September, 2011, in the US District Court for the Southern District of Florida, charges the defendants with soliciting more than USD3 million from individuals to participate in the fraudulent scheme from approximately 2006 through 2009. Defendants allegedly placed most of participants’ funds in commodity futures trading accounts and lost approximately USD1.3 million trading. Defendants also allegedly misappropriated approximately USD1.8 million of participants’ funds for personal use, including car, mortgage, and credit card payments, and used misappropriated funds for so-called profit payments to participants, as is typical of a Ponzi scheme.
Hernandez allegedly claimed to friends and acquaintances that he had developed a successful program to day trade futures. Hernandez also allegedly claimed that his investments in commodities and overseas stock markets were returning 180 percent annually and were risk-free. Hernandez, however, misled investors about the likelihood of profiting from commodity futures investments and the substantial risks involved in such investments, according to the complaint.
This action arose from a joint CFTC cooperative enforcement investigation with the US Attorney’s Office for the Southern District of Florida (USAO) and the Federal Bureau of Investigation (FBI). The USAO filed a criminal information against Hernandez on September 30, 2011. The CFTC thanks for USAO and the FBI for their assistance.
In its continuing litigation, the CFTC seeks restitution, rescission, disgorgement of ill-gotten gains, trading and registration bans, civil monetary penalties, and permanent injunctions against further violations of federal commodities laws.
