The Commodity Futures Trading Commission (CFTC) announced today that the US District Court for the Southern District of Florida entered a consent order on March 20 imposing a permanent injunction, civil monetary penalty, damages and equitable relief against Florida resident Joseph Carvajales .
The order requires Carvajales to pay $2.4 million in restitution to defrauded customers and a civil monetary penalty of $1 million. The order also imposes permanent trading and registration bans and a permanent injunction prohibiting the defendant from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.
The order finds, among other things, Carvajales, an employee of The W Group (WTG), knowingly or recklessly made numerous false statements to clients and prospective clients of WTG in connection with futures, retail foreign exchange and options contracts. The order resolves the CFTC case filed on February 7, 2022.
The order finds that from June 2013 to June 2020, Carvajales, among other things, made false claims to prospective clients of WTG about where WTG was trading. that WTG would use a commodity trading algorithm to trade futures, forex and/or options on behalf of clients; that individual trading accounts were opened, that client funds were deposited into trading accounts and that trades were executed; and the profit potential that could be achieved and the risks of the trades. In fact, no individual trading accounts were ever opened, no client funds were deposited into trading accounts, and no trades were conducted.
Previously, the U.S. District Court for the Southern District of Florida issued an order in absentia against co-defendants WTG and Larry Ramos Mendoza (Ramos) of Miami, Florida. That order found that WTG and Ramos defrauded more than $24 million from at least 220 customers, fraudulently attracted customers and sent them false account statements that purported to show profits and trading activity when none existed.
The order required WTG and Ramos to pay $7,482,680 in restitution and a civil monetary penalty of $22,448,040. It also imposed permanent trading and registration bans and a permanent injunction barring the defendants from further violations of the CEA and CFTC regulations as alleged.
The CFTC cautions that restitution orders may not always result in the recovery of lost funds because violators may not have sufficient funds or assets.