Washington, D.C. —The Commodity Futures Trading Commission announced that on August 29, the U.S. District Court for the Northern District of Illinois entered a judgment against William Thomas Caniff, a resident of Ohio, and his company, Berkley Capital Management, LLC (BCM), a Wyoming limited liability company with offices in Ohio, and two investment pools that BCM operated as Delaware limited partnerships with offices in Wintersville, Ohio, BBOT 1, LP (BBOT) and Berkley II, LP (Berkley II).

The court ordered these defendants to pay $2,598,632 in restitution and a $3.6 million civil monetary penalty for their wrongdoing in connection with a binary options fraud scheme. On September 14, the court also entered a consent order for permanent injunction, restitution, and a civil monetary penalty against Caniff’s partner, Arie Bos, a resident of Rotterdam in the Netherlands, who will be jointly and severally liable to pay the $2,598,632 in restitution in addition to a $500,000 civil monetary penalty.

The charges stem from a CFTC action filed on May 1, 2019 charging the defendants with fraud and misappropriation. [See CFTC Press Release No. 7923-19]  

Case Background

The orders find in January 2016, Caniff formed a partnership with Bos called BCM, which offered two pools for trading foreign exchange binary options through accounts at the North American Derivatives Exchange (NADEX). Caniff, a convicted felon, opened a trading account at NADEX by making false statements to NADEX that concealed his criminal record.  

From approximately February 2016 through September 2018, Bos solicited 58 pool participants who paid more than $3.3 million to invest in these pools. All of the participants were in the Netherlands with the exception of one U.S. participant. Caniff was purportedly trading their funds at NADEX. However, rather than depositing their funds in the account he opened at NADEX, Caniff simply misappropriated participants’ funds and used them to pay himself approximately $1.2 million and Bos approximately $1.1 million. 

To conceal the misappropriation, Caniff sent bogus trading results to Bos who, in turn, reported false profits and exaggerated pool values to participants. For example, Bos reported profits for months in which there was no trading; grossly exaggerated the size of the fund by claiming a value of $5.5 million in 2016 when the fund’s account balance was less than $278,000; and reported an average rate of return of 10% in 2016 when there was, in fact, a negative rate of return. The order finds that Bos committed fraud by ignoring numerous red flags that should have prompted him to seek corroboration of BCM’s purported profits at NADEX. Bos was also found to have issued false BCM account statements to participants. The court’s order against Caniff also found that Caniff made a false statement to NADEX.

Parallel Criminal Actions

Caniff is facing charges in two criminal cases related to this binary options fraud scheme. In United States v. Caniff, 2:21-cr-00121-MHW (S.D. Ohio, June 30, 2021), a jury trial is scheduled in Ohio on October 31, 2022, where Caniff faces charges of wire fraud and money laundering. In United States v. Caniff, 1:19-cr-00332 (N.D. Ill. Apr. 17, 2019), a criminal case is also pending against Caniff who was charged with making a false statement on his application to open a NADEX trading account. 

The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure that wrongdoers are held accountable. 

The CFTC appreciates the cooperation and assistance of NADEX.

The Division of Enforcement staff members responsible for this case are Susan B. Padove, Joseph Patrick, Venice Bickham, Elizabeth M. Streit, Scott R. Williamson, and Robert T. Howell.

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CFTC’s Binary Options Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories and Articles that provide the warning signs of fraud, including the Binary Options and Fraud Advisory, which alerts customers to this type of fraud and list simple ways to spot it.

The CFTC also strongly urges the public to verify a company’s registration with the Commission before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the CFTC Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.