The US Commodity Futures Trading Commission (CFTC) has filed a federal civil enforcement action charging Alexander Giap (Giap) of Annandale, Va, with fraud by acting as an unregistered commodity trading advisor (CTA) and operating two separate fraudulent schemes involving commodity futures trading. The CFTC’s complaint was filed in the US District Court for the Eastern District of Virginia, Alexandria Division.
The complaint also names iTRADE LLC (iTrade), of Falls Church, Va, a firm Giap operated, as a relief defendant because iTRADE received funds as a result of Giap’s fraudulent conduct but has no legitimate claim to those funds. Neither Giap nor iTRADE has ever been registered with the CFTC.
According to the CFTC complaint filed on 23 February, 2012, Giap is a convicted felon who pleaded guilty in 1995 to bid rigging, wire fraud, and bank fraud for his role in three separate criminal schemes that involved the buying, selling, and loan refinancing of residential real estate in northern Virginia from 1991 to May 1995 (US v Alexander Giap a/k/a Cong Giap, Crim. No. 95-415-A [E.D. Va.]).
Specifically, the CFTC complaint charges that from January 2009 through at least September 2009, and from October 2009 through at least October 2011, Giap operated two separate fraudulent schemes involving commodity futures trading. In the first scheme, Giap allegedly acted as an unregistered CTA and used iTRADE as a “school” to conduct his CTA business and to solicit funds for his CTA business. In the second scheme, Giap allegedly acted as an unregistered CTA but did not incorporate iTRADE into his operations. In both schemes, Giap defrauded clients through a series of material omissions which resulted in substantial financial losses to the clients, according to the complaint.
In the first scheme, Giap allegedly fraudulently solicited and accepted at least USD104,000 from 13 or more individuals he referred to as “students” to participate in iTRADE. Giap allegedly induced participation in the iTRADE scheme by omitting material facts to actual and prospective clients. At a minimum, according to the complaint, Giap failed to disclose that:
he had a history of substantial losses incurred trading futures;
he was a convicted felon and owed restitution relating to his criminal conviction;
he was subject to IRS liens for delinquent taxes; and
he was required to register as a CTA but was unregistered.
Moreover, the complaint alleges that Giap made fraudulent statements in his solicitations and agreements with students, and fraudulently indicated that the clients’ funds were not at risk because he provided a “money back guarantee.”
In the second scheme, from October 2009 through October 2011, Giap allegedly acted as an unregistered CTA when he advised at least four individuals regarding the value or advisability of trading futures contracts directly through managed accounts in exchange for compensation or profit. The complaint alleges that Giap fraudulently solicited over USD700,000 from members of the general public as part of the second scheme.
In its continuing litigation, the CFTC seeks restitution, disgorgement, civil monetary penalties, trading and registration bans and a permanent injunction prohibiting further violations of the federal commodities laws.