The US Commodity Futures Trading Commission (CFTC) has secured an order of default judgment and permanent injunction against Michael James Seward, Yan Kaziyev, and their company SK Madison Commodities.
The order requires the defendants to pay restitution totalling USD1,036,981.01 and a civil monetary penalty of USD2,486,865.57.
The order also imposes permanent trading and registration bans against the Defendants and orders that assets controlled by SK Madison LLC, a successor company named as a relief defendant in the action, be released and applied toward payment of defendants’ restitution obligation.
The court’s order stems from a CFTC complaint filed on 24 March alleging that Seward and Kaziyev, by and through SKMC, fraudulently solicited more than USD1.3 million from members of the public to trade futures in a commodity pool by, among other things, misrepresenting their trading practices and historical trading returns.
The complaint further alleged that the defendants prepared and distributed to pool participants false account statements and performance reports showing huge profits while at the same time, the defendants were losing money trading futures and diverting large amounts of pool participants’ funds for the defendants’ own use.
In addition to fraud, the complaint charged the defendants with certain registration violations.
As a result of the filing of this action, more than USD500,000 of pool participant funds controlled by the defendants and the relief defendant were frozen.