CTFC Gets Court Settlement in Forex Trading Fraud Case

May 1st, 2012
in econ_news

Econintersect:  The CTFC (Commodities Futures Trading Commission) announced they have been awarded a court order for $60 million in ctfc-logoSMALLrestitution and $5 million in civil penalty against Peter Son, Danville California.  Son had pled guilty to federal criminal charges of fraud with regard to an $85 million Forex trading scam involving at least 500 customers.  Ann Lee, Son’s wife, was also ordered to disgorge $300,000 in “ill-gotten gains” that she received as wages, which no work was performed.  The companies that Son used to perpetuate his frauds were SNC Asset Management, Inc and SNC Investments, Inc.

Follow up:

Following is the press release from the CTFC:

Release:  PR6245-12

April 26, 2012

Federal Court Enters Order Settling CFTC $85 Million Forex Fraud Action against California Resident Peter Son and his Companies SNC Asset Management, Inc. and SNC Investments, Inc.

Defendants ordered to pay $5 million civil monetary penalty

Son pleaded guilty to federal charges in related criminal action and was sentenced to 180 months in prison and ordered to pay over $60 million in restitution

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court supplemental consent order requiring defendants Peter Son (Son) of Danville, Calif., and his companies, SNC Asset Management, Inc., and SNC Investments, Inc., to pay a $5 million civil monetary penalty. The court also ordered Son’s wife, relief defendant Ann Lee (Lee), to disgorge $300,000 of ill-gotten gains. The court’s supplemental consent order, entered on April 19, 2012, by Judge Maxine M. Chesney of the U.S. District Court for the Northern District of California, resolves a CFTC complaint that charged the defendants with operating an $85 million fraudulent foreign currency (forex) scam (see CFTC Press Release 5666-09, June 9, 2009). The CFTC complaint named Lee as a relief defendant because she received monthly funds as purported wages, although she performed no services for SNC.

The supplemental consent order recognizes that an order of restitution in excess of $60 million was imposed on Son in a related criminal action. The supplemental order follows a consent order of permanent injunction entered by the court on May 13, 2011, which established the defendants’ liability, and permanently barred the defendants from engaging in certain commodity-related activities and from future registration with the CFTC, among other things.

According to the May 13, 2011, consent order, the defendants fraudulently solicited at least $85 million from at least 500 customers to trade forex. The defendants in their solicitations falsely claimed to be operating successful forex trading firms and guaranteed monthly returns generated by their trading, the order finds. These representations, and subsequent fictitious account statements depicting profitable returns on individual accounts, created the false impression that the defendants were trading forex profitably, the order finds. At best, however, only a small percentage of the $85 million solicited was traded and the defendants’ limited trading resulted in overall losses, according to the order.

Rather than trade on behalf of customers, the defendants misappropriated customer funds to pay purported profits and principal to customers, to pay money to Son’s wife, and for personal expenses such as mortgage payments, country club dues, and homeowner dues, the order finds.

On April 9, 2010, in a related criminal action, Son pleaded guilty to conspiracy to commit wire fraud and conspiracy to commit money laundering (United States v. Peter C. Son, No. CR 09-00755 DLJ (N.D. Cal. filed July 27, 2009)). On July 30, 2010, Son was sentenced to 180 months in prison. On October 25, 2011, Son was ordered to pay restitution of $60,302,886.59 as part of the criminal judgment.

The CFTC appreciates the assistance of the National Futures Association, the US Attorney for the Northern District of California, the Securities and Exchange Commission, and the Financial Supervisory Service of Korea.

CFTC Division of Enforcement staff members responsible for this case are Timothy M. Kirby, Brian G. Mulherin, Kevin K. Batteh, Kara Mucha, Gretchen L. Lowe, and Vincent A. McGonagle.

-->Media Contacts
Dennis Holden

Editorial note: Son was obviously not Too Big To Fail.

John Lounsbury

Hat tip to Roger Erickson.

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