September 9, 2019

CFTC Charges Unregistered Forex Trading Firm and Its Principal with Fraud and Misappropriation

Washington, DC – The U.S. Commodity Futures Trading Commission has filed a civil enforcement action in the Southern District of New York against defendants Dominick Vincent Carducci and his company VOS Capital Management, LLC (VOS Capital), both of South Carolina.  The defendants are charged with fraud and misappropriation in connection with the unlawful operation of a commodity pool that purported to trade leveraged or margined foreign currency (retail forex).  The CFTC complaint alleges fraudulent solicitation of at least 30 commodity pool participants, as well as the misappropriation of over $1.1 million of pool funds that defendants used to reimburse certain participants and for Carducci’s personal use, such as international travel, luxury automobiles, and student loan debt.

Starting in at least August 2016, according to the complaint, the defendants fraudulently solicited and misappropriated money from at least 30 individuals for pooled investments in retail forex.  Between August 2016 and September 2018, the defendants received at least $1.1 million from pool participants for investment in commodity pools that would purportedly trade forex.  The defendants, however, never traded forex on behalf of pool participants, and concealed their fraud by issuing false account statements to the pool participants.

As alleged in the complaint, in order to entice pool participants, the defendants falsely represented, among other things, that:

• They had made large profits for themselves and pool participants from trading forex;
• They maintained a forex trading account with a registered foreign exchange dealer that had $12 million under defendants’ management;
• They would trade forex on behalf of pool participants;
• Pool participants would realize profits of up to 18% per month on their investments without losses;
• Pool participants could withdraw the funds they had invested upon request.

Rather than trade forex for pool participants, the defendants misappropriated the majority of pool funds.

As further alleged, upon the defendants’ direction, pool participants deposited their funds into VOS Capital’s bank account.  Thereafter, defendants used the majority of those funds to pay Carducci’s personal expenses, and to support his lavish lifestyle by, among other things, acquiring luxury automobiles and paying for international travel.  The remainder of the funds was paid to some pool participants, in the style of a Ponzi scheme.  The defendants also allegedly created and issued false account statements to conceal their trading losses and misappropriation by inflating and misrepresenting the value of pool participants’ investments.

In its continuing litigation against the defendants, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act, and CFTC regulations, as charged.

CFTC Division of Enforcement staff members responsible for this action are Alben Weinstein, Linda Y. Peng, David W. MacGregor, Lenel Hickson, Jr., and Manal M. Sultan.

CFTC’s Foreign Currency (Forex) Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency Trading (Forex) Fraud Advisory, which states that the CFTC has witnessed a sharp rise in forex trading scams in recent years.

Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.

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