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A Long Island man imprisoned for running a foreign exchange scheme was accused on Monday by the U.S. Commodity Futures Trading Commission of taking $1.5 million from investors, hiding his losses and spending what remained on phony returns payments and personal expenses.

NY Forex Trader Imprisoned For $1.5M Fraud Sued By CFTC

NY Forex Trader Imprisoned For $1.5M Fraud Sued By CFTC

By Jack Newsham of Law360.com

A Long Island man imprisoned for running a foreign exchange scheme was accused on Monday by the U.S. Commodity Futures Trading Commission of taking $1.5 million from investors, hiding his losses and spending what remained on phony returns payments and personal expenses.

Daniel Winston LaMarco, 51, began serving a three-and-a-half-year sentence earlier this year after pleading guilty to wire fraud and commodities fraud for losing $862,000 in investor funds and lying about it before he stopped answering calls from investors last year. Now, the CFTC seeks as much as triple that amount in damages and a permanent ban on commodities trading.

“Through our cooperative enforcement efforts, we can combine our available remedies with those of our law enforcement partners to achieve maximum deterrence and protection for customers and the markets,” James McDonald, the CFTC’s enforcement chief, said in a statement. “In appropriate cases like this one, the U.S. Department of Justice can seek a term of imprisonment, while we seek to ensure wrongdoers never return to the markets we regulate.”

According to the commission’s complaint, LaMarco, who is an independent software consultant, falsely claimed to be a successful foreign exchange trader and convinced a couple to invest $440,000 with him in 2011. He ultimately raised $1.5 million from 13 investors in several states and paid out $630,000, “in the nature of a Ponzi scheme,” the government claimed.

Although LaMarco put $1.3 million of the investor money into trading accounts run by him and his company GDLogix Inc. and held himself out as the operator of a commodity pool, neither he nor his company ever registered with the CFTC, the agency said. In February 2016, he told investors that their balances had grown to nearly $1.8 million, but in reality, he “had lost nearly all of the participants’ funds,” the commission said.

The regulator’s suit accuses him of fraud and registration violations.

LaMarco pled guilty to similar criminal charges last August and was ordered to pay $862,000 in restitution and to serve three and a half years in prison followed by three years of supervised release. He has appealed that judgment, and the government has sought dismissal, saying that he agreed not to appeal a sentence of less than seven and a quarter years.

Robert J. Del Col, LaMarco’s attorney in the criminal proceedings, has argued in a court filing that LaMarco’s previous lawyer gave him bad advance and said that his client was committed to making things right with his victims. He didn’t immediately respond to a request for comment on Tuesday.

The CFTC is represented by Michael R. Berlowitz and Danielle Karst.

Counsel information for LaMarco and his company wasn’t immediately available on Tuesday.

The case is U.S. Commodity Futures Trading Commision v. LaMarco et al., case number 2:17-cv-04087, in U.S. District Court for the Eastern District of New York.

Source: Law360.com

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The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.