US Federal court fines Valdas Dapkus and two of his firms for fraudulent forex fund scheme
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The US commodities regulator, the Commodity Futures Trading Commissions (CFTC), recently announced that the federal court has fined Valdas Dapkus and two of his companies, ordering them to pay over $2.8 million. The monetary sanctions come in response to a fraudulent forex fund scheme that Dapkus was operating using the two firms.
Federal Court Orders Unregistered Commodity Trading Advisor, Its Manager, and a Managed Fund to Pay Over $2.8 Million in Monetary Sanctions for Fraudulent Retail Forex Fund Scheme: https://t.co/XurfDqbzZ1
— CFTC (@CFTC) December 28, 2023
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Details of the case
According to the Court for the District of New Jersey, the companies in question are Tradewale LLC and Tradewale Managed Fund. The firms, as well as Dapkus, were soliciting members of the public to invest in a purported forex trading fund. However, the users were misled through false claims, and then the provided investor funds were misappropriated.
The defendants were making false statements regarding Tradewale, claiming that it has a unique trading system that uses AI to generate massive returns. However, soon after depositing the money, investors found themselves unable to withdraw the funds, or even access them.
The CFTC’s statement says that Tradewale also made claims about generating average monthly returns from 4% to 11%, while the average returns on a yearly basis were over 55%, and all that with minimal risk.
The court came to a decision that the defendants must pay $713,520 in restitution to the defrauded investors. In addition, they must also pay a $2.14 million civil monetary penalty. Moving forward, both Dapkus and the Tradewale companies will be permanently banned from trading or operating, due to the violations of commodity trading laws.
Investors unlikely to get their money back
The case against Dapkus and his companies started back in September 2021, after CFTC filed an enforcement action against the entities, charging them with misappropriation, fraud, as well as failure to register properly with the authorities — something they are also obligated to do according to the commodity laws.
The complaint said that Tradewale had approximately 17 investors, and that none of them have received any returns. Meanwhile, the defendants misappropriated more than $700,000 since they started conducting the scheme.
The CFTC also warned that the judgment does not mean that investors will necessarily get their money back. However, the agency said that it intends to keep working toward protecting customers, and holding wrongdoers accountable.
The US continues its war on forex scams
However, while Dapkus and Tradewale entities may have been brought to justice, the US forex market is still nowhere near being cleaned from scammers seeking to steal investors’ money. In fact, the scams seem to be more frequent and more severe than previous reports had indicated.
Only a week ago, the US Court ruled against Michael DaCorta, as he and his three companies, as well as four other involved individuals, were ordered to pay almost $60 million in fines. Due to their actions, more than 800 investors experienced losses of around $80 million.
The CFTC then brought another forex fraud incident under the spotlight, this time pointing out Avinash Singh and Highrise Advantage. The court issued a default judgment against Singh and his firm, including a permanent injunction and monetary sanctions, as his multi-level forex scheme defrauded investors of $102 million.
These are only some of the most recent examples of major forex scams that the US court has handled, with a seemingly endless supply of additional cases that the regulators continue to report.
