The US Commodity Futures Trading Commission (CFTC) has charged Lyndon Lydell Parrilla and his company, Green Tree Capital, both of Woodland Hills, California, with operating a fraudulent multi-million dollar foreign exchange (forex) scheme since at least 2009.
The CFTC complaint was filed on April 12, 2011, in the US District Court for the District of Massachusetts. On April 13, 2011, Judge Joseph L Tauro entered an ex parte restraining order freezing the defendants’ assets and prohibiting the destruction or alteration of their books and records.
The complaint charges that Parrilla and Green Tree Capital, from approximately October 2009 to the present, fraudulently solicited at least USD4 million from at least 50 customers in the United States for the purported purpose of trading off-exchange forex contracts on a leveraged or margined basis in managed accounts. Green Tree Capital is charged with acting as a Commodity Trading Advisor (CTA) and Parrilla with acting as an Associated Person (AP) of a CTA, without being registered with the CFTC.
In soliciting the funds, Green Tree Capital allegedly misrepresented the nature and performance of the investment, its experience and expertise, the total amount of assets under its management and that customer funds would be refunded upon request. Defendants failed to disclose that the National Futures Association (NFA) permanently barred Parrilla from NFA membership. Defendants also allegedly represented that Green Tree Capital had a record of delivering consistently profitable returns when, in fact, it incurred trading losses since its inception, and almost 80 percent of the money sent by customers was never traded or invested in any manner, according to the complaint. Instead, the defendants allegedly misappropriated at least USD2.9 million of customer funds to pay personal expenses, including Las Vegas casino expenses, automobile and clothing purchases, entertainment expenses and cash withdrawals of more than USD1.65 million. To disguise their misrepresentations, trading losses and misappropriations, the defendants allegedly sent false account statements to customers by email.
In its continuing litigation, the CFTC seeks rescission of all contracts and agreements, restitution to defrauded customers, disgorgement of defendants’ ill-gotten gains, a civil monetary penalty from each defendant, permanent registration and trading bans and a permanent injunction against further violations of the federal commodities laws.
The CFTC appreciates the assistance of the Federal Bureau of Investigation (FBI) and the US Attorney’s Office for the District of Massachusetts. This CFTC enforcement action is part of a joint CFTC cooperative enforcement effort with the US Department of Justice (DOJ) and the FBI. On April 5, 2011, the US Attorney’s Office in Boston filed under seal a complementary action in the US District Court for the District of Massachusetts, entitled United States v. Parilla, which alleges violations of US criminal laws by Parrilla. Federal authorities arrested Parrilla in southern California on April 12, 2011, the same day the criminal action was unsealed.