Federal Court Imposes Over $29 Million in Restitution and Penalties Against California and Colorado Residents for Binary Options and Forex Fraud, Registration Violations, and Failure to Comply with Commodity Pool Operator Regulations

July 15, 2022

Washington, D.C. — The Commodity Futures Trading Commission today announced the U.S. District Court for the Eastern District of California entered an order granting the CFTC’s motion for entry of default judgment against California-based John D. Black and his affiliated entities Financial Tree (d/b/a Financial Tree Trust); Financial Solution Group (d/b/a Financial Solution Group Trust); and New Money Advisors, LLC; and his associates Christopher Mancuso and Joseph Tufo; as well as Colorado-based John P. Glenn and his law firm, The Law Firm of John Glenn, P.C. The order finds they are liable for solicitation fraud in connection with binary options and retail foreign currency (forex) transactions, fraud by commodity pool operators (CPOs) and associated persons (APs), multiple CFTC registration violations, and failure to comply with CPO regulations.

The order imposes Black, Financial Tree, Financial Solution, New Money, Mancuso, Glenn, and Glenn’s law firm obligations to pay nearly $10.5 million in restitution jointly and severally; and Tufo to pay over $4.5 million of that restitution jointly and severally with the other defendants. The order further imposes civil monetary penalties of approximately $5.4 million on Black, Financial Tree, Financial Solution, and New Money; $12.1 million on Mancuso; $680,000 on Tufo; and $850,000 on Glenn and his law firm. Additionally, under the order, the defendants are permanently enjoined from engaging in conduct that violates the Commodity Exchange Act (CEA), registering with the CFTC, and trading in any CFTC-regulated markets. Finally, the order requires seven relief defendants to disgorge over $2.6 million they received from the scheme to which they have no lawful entitlement. The order resolves a CFTC enforcement case filed June 15, 2020. [See CFTC Press Release No. 8197-20]

Case Background

In the order, U.S. District Judge Troy L. Nunley found that from approximately June 15, 2015 to June 15, 2020 the defendants fraudulently solicited members of the public (pool participants) to contribute funds to fraudulent binary options and forex commodity pools; misappropriated millions of dollars of those funds for personal use; made Ponzi payments to existing pool participants with new pool participants’ funds; and made false statements to explain their failure to return funds and deliver promised profits. The order further finds the defendants failed to register as CPOs and APs of CPOs, as appropriate, and certain defendants violated multiple requirements applicable to CPOs relating to acceptance and commingling of funds, operation of CPOs as separate entities, and required disclosures to pool participants.

The Division of Enforcement staff members responsible for this action are Anthony Biagioli, Elsie Robinson, Jeff Le Riche, Christopher Reed, and Charles Marvine, and former staff member Jo Mettenburg.

CFTC’s Commodity Pool, Binary Options, and Forex Fraud Advisories

The CFTC has issued several customer protection  Fraud Advisories and Articles that provide the warning signs of fraud, including the Commodity Pool Fraud AdvisoryBinary Options and Fraud Advisory, and the Foreign Currency Trading (Forex) Fraud Advisory, which alert customers about these types of fraud and list simple ways to spot them.

The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that company. A company’s registration status can be found using NFA BASIC.

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the CFTC Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

Source: Commodity Futures Trading Commission