The CFTC notes that Daniel LaMarco’s claims about him not having operated any Ponzi scheme run counter his guilty plea in a related criminal case.
As a Forex fraud case brought by the United States Commodity Futures Trading Commission (CFTC) against Daniel Winston LaMarco and his company, GDLogix Inc., continues at the New York Eastern District Court, the US regulator has sought to respond to a Motion by LaMarco to dismiss the case.
In recent Court filings, seen by FinanceFeeds, the CFTC objects to the efforts of LaMarco to quash the case against him.
In brief, LaMarco insists that, because he did some Forex trading and even made some profits “prior to his life falling apart,” he did not operate a Ponzi scheme. But the CFTC notes that, as long as LaMarco misrepresented the amount of profits, falsified account statements, and sent incoming pool participant funds to other participants as purported returns on investments, he operated a Ponzi scheme and violated the Commodity Exchange Act.
According to the CFTC, on top of the legal problems associated with LaMarco’s purported factual assertions, the assertions themselves “run the gamut from grossly inaccurate and outright false to irrelevant”. For instance, LaMarco argues that he “did not solicit any investor” and did not “misappropriate any funds”. This, however, is contrary to the evidence and to his written plea allocution in the related criminal case brought by the United States Attorney’s Office for the Eastern District of New York.
In his motion to dismiss the CFTC case, LaMarco says that:
“There was no scheme to defraud; there was no fraudulent intent and never did the defendant contemplate any actual harm or injury to anyone. Via profuse extrinsic evidence, no money or property was ever the object of any alleged fraud.”
This contradicts to what the defendant says in his plea:
“Between . . . January 2011 and March 2016, within the Eastern District of New York, while I acted as a commodity pool operator, I knowingly and willfully, . . . directly and indirectly employed devices, schemes, and artifices to defraud investors engaged in transactions, practices in courses of business which operated as a fraud, and deceit upon investors by sending monthly statements to investors, falsely reporting the performance of their investments in the commodity pool.”.
The CFTC is asking the Court to deny the defendant’s motion to dismiss.
Let’s recall that, in July 2017, CFTC filed a civil enforcement action LaMarco and GDLogix Inc., charging them with Forex fraud, commodity pool fraud, and failure to register with the CFTC, as required.
According to the CFTC’s Complaint, from January 2011 through March 2016, LaMarco fraudulently solicited and accepted $1,492,650 from 13 individuals to trade off-exchange leveraged or margined retail derivatives forex contracts in a commodity pool operated by the defendants.
To conceal and perpetuate his fraud, beginning on or about February 2011, LaMarco emailed participants fabricated monthly statements purported to provide the pool’s profits, losses, and net balances of each participant. However, according to the Complaint, all of the information in the monthly statements was false. In reality, LaMarco had lost nearly all of pool participants’ funds through unsuccessful trading and by diverting $630,050 of the total principal invested to some participants as purported “profits” in the nature of a Ponzi scheme.
In a related criminal action involving the same conduct at issue in the CFTC’s case, LaMarco earlier pleaded guilty to one count of commodities fraud and one count of wire fraud. On February 3, 2017, LaMarco was sentenced to 42 months in prison and ordered to pay $872,600 in criminal restitution.