A court in the US state of Texas has approved a complaint from a major regulator against two men who are accused of pretending to be regulators for fraud purposes.
Morgan Hunt and Kim Hecroft were accused of pretending to be representatives of the Commodity Futures Trading Commission, which is a regulator covering the futures and swaps markets.
In addition to this, a complaint launched by the real Commodity Futures Trading Commission (CFTC) shows that the pair allegedly invited investment from people looking to trade binary options and foreign exchange.
According to the CFTC, the scheme began as early as January 2017 and continued until late last year – with the alleged activity ending around September 2018.
Now, they have been told by the court that they must pay up a six-figure sum each, plus restitution, to settle a lawsuit brought against them by the regulator.
The pair appeared to have different guises for their alleged scam. Kim Hecroft, for example, maintained a brand known as First Options Trading. While Morgan Hunt ran an outfit known as Diamond Trading Investment House.
As is increasingly common in the trading world, the pair maintained Facebook pages which encouraged investors to part with their cash.
Their offer to customers was to provide investment services in margin-based, or leveraged, forex contracts. However, some of the certifications they provided, such as CFTC documents, were allegedly forged.
The information they provided to investors regarding their past performance, such as trading in the worlds of forex, precious commodities such as diamonds and more, were also allegedly fake.
In a statement, the CFTC accused the pair of also misleading investors when it came to the withdrawal of profits.
They “falsely told customers that they could not withdraw their purported investment profits without first paying a tax to the CFTC, and misappropriated customer funds”, the statement read.
It went on to accuse the pair of “fraudulent actions”, which “included providing fake account statements, impersonating a CFTC investigator, and sending forged documents purportedly authored by the CFTC’s General Counsel and bearing the image of the CFTC’s official seal”.
The CFTC also took the opportunity to outline its advice to consumers regarding online trading.
“As the CFTC has repeatedly warned, retail customers should exercise caution before buying or trading cryptocurrencies on unfamiliar Internet websites or social media”, said James McDonald, who is the Director of Enforcement at the organisation.
“The CFTC reiterates that it does not collect taxes or fees, and will continue to educate the investing public and aggressively pursue misconduct in this arena”, he added.
According to the CFTC, Hecroft hails from the city of Baltimore in the US state of Maryland.
Hunt is believed to be from Arlington, Texas.
The pair will now need to pay fees as a result of the ruling. They have been told they must pay both restitution and a civil monetary penalty of $180,000 each.
Both have been banned from trading for life.