March 14, 2013

CFTC Sues Michael Alcocer and His Company, InovaTrade, Inc., for Foreign Currency Fraud and Misappropriation

Defendants allegedly solicited over $10.6 million from more than 400 customers worldwide

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a lawsuit in the U.S. District Court for the Southern District of Florida against Michael Alcocer and his company InovaTrade, Inc. (InovaTrade). The CFTC complaint alleges that Alcocer and InovaTrade orchestrated a fraudulent scheme that, between November 2008 and September 2011, induced more than 400 customers to deposit more than $10.6 million with InovaTrade, a purported Retail Foreign Exchange Dealer (RFED), to trade off-exchange foreign currency (forex). The CFTC’s complaint was filed on September 21, 2012, and the CFTC recently served its lawsuit upon defendants in Panama.

The CFTC Complaint alleges that InovaTrade, using its website as well as certain third-party introducing brokers, fraudulently solicited customers, both within and outside the United States, to open retail forex trading accounts — some managed by InovaTrade. The Complaint further alleges that defendants sent InovaTrade customers false trading activity statements and misappropriated all customer funds held as of September 2011 — likely more than $9.8 million.

Previously, in January 2011, the CFTC sued InovaTrade in the U.S. District Court for the Western District of Missouri for failing to register with the CFTC as an RFED (see CFTC Press Release 5974-11, January 26, 2011). In July 2011, the same court entered an Order of Permanent Injunction prohibiting InovaTrade from continuing to operate as an RFED with U.S. customers. The CFTC’s current Complaint alleges that beginning in or around August 2011, InovaTrade refused to honor any customer withdrawal requests, and in October 2011, defendants closed InovaTrade’s operations and misappropriated all remaining customer funds.

In its continuing litigation, the CFTC seeks civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains, trading and registration bans, and a permanent injunction against further violations of the federal commodities laws, as charged.

The CFTC appreciates the assistance of the Panama Superintendencia del Mercado de Valores (SMV).

CFTC Division of Enforcement staff responsible for this case are Margaret Aisenbrey, Jenny Chapin, Stephen Turley, Mary Lutz, Charles Marvine, Rick Glaser, and Richard Wagner.

Media Contact
Dennis Holden
202-418-5088
 

Last Updated: March 14, 2013