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CFTC files anti-fraud action against Shalhoub for futures Ponzi scheme

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The US Commodity Futures Trading Commission has charged Jeffrey Shalhoub of Staten Island, New York, and his company, Jeff Shalhoub Investments of Long Island City, New York, with operating a commodity futures Ponzi scheme.

According to the CFTC complaint, filed on 17 May 2010, in the US District Court for the Eastern District of New York, Shalhoub solicited approximately USD300,000 from at least 12 of his ex-wife’s friends and family to trade futures.

The complaint further charges that Shalhoub and JSI commingled customer money with Shalhoub’s personal funds and that Shalhoub misappropriated at least USD154,500 of customer funds for his personal use.

Specifically, the complaint charges that Shalhoub promised customers monthly returns ranging from ten to 36 per cent, while representing that customers’ original investment could be returned at any time. Shalhoub further claimed that the return was produced by his successful trading.

However, any purported “profits” paid to customers came from existing customers’ original principal and/or from money invested by subsequent customers, similar to a Ponzi scheme.

Finally, the complaint alleges that, to conceal and perpetuate the fraud, Shalhoub provided false account statements to customers, misrepresenting that their accounts were increasing by as much as 5.2 per cent per week when, in fact, the accounts were losing money every month.

In its continuing litigation, the CFTC seeks disgorgement of ill-gotten gains, restitution to defrauded customers, civil monetary penalties and trading and registration bans.

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