Washington, D.C. — The Commodity Futures Trading Commission today announced that the U.S. District Court for the District of New Mexico entered a consent order for permanent injunction, monetary sanctions, and equitable relief against Douglas Lien of Santa Fe, New Mexico. The court imposed more than $10.3 million in monetary sanctions and relief for defendant’s wrongdoing, including his misappropriation of client money intended for futures trading. According to the order, the defendant admitted to misappropriating the funds and issuing false account statements to conceal his fraud for nearly 20 years.

The order requires that Lien pay restitution of $5,195,679 and a civil penalty of $5,195,679, and imposes permanent trading and registration bans. The judgment resolves a CFTC enforcement case filed on December 9, 2019. [See CFTC Press Release No. 8094-19]

Case Background

According to the order, Lien admits that from at least August 2000 until December 9, 2019, he solicited more than $14.2 million from 45 individuals to manage their trading in commodity futures, specifically U.S. Treasury Bond futures. However, Lien did not invest the client funds, but instead operated a classic Ponzi scheme, using the money to pay other clients. He also kept more than $3.5 million for so-called “management fees” he billed clients based on false trading profits. In addition, Lien gave his clients inaccurate account statements, including erroneous annual IRS Form 1099s that reported millions in fake profits. The order also states Lien failed to register as a futures commission merchant (FCM) to legally solicit and accept money from commodity futures clients for futures trades. 

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 the State of New Mexico Securities Division.

The Division of Enforcement staff responsible for this case are Bryan Hsueh, Susan B. Padove, David A. Terrell, Scott R. Williamson, and Robert T. Howell.