Today, the Commodity Futures Trading Commission (CFTC or Commission) announced the approval by the Southern District of Florida of a Consent Order to resolve claims against a Ponzi-scheme operator that fraudulently solicited more than $19 million from at least 220 individuals in the U.S. and abroad.

For more than seven years from 2013 through 2020, Joseph Carvajales (Carvajales), along with the W Trade Group LLC (WTG) and Larry Ramos Mendoza (Ramos, and collectively, Defendants), fraudulently solicited customers, mainly other Spanish-speakers, by phone, the internet, and U.S. mail, to trade, among other things, commodity futures, forex and options. Defendants solicited customers by making numerous false and misleading statements concerning their alleged trading successes and methods. In particular, they falsely represented that they were successful traders and promised customers would see profits of up to 4% by virtue of a commodity trading algorithm Ramos had developed. They also falsely told investors that WTG operated on major exchanges and that any trading done in the U.S. was supported by SIPC. In reality, while WTG did open a trading account in its own name, it never traded the account, and WTG never opened a single trading account for its customers. Defendants created fraudulent account statements to cover up their fraud and made Ponzi-style payments to certain investors to perpetuate the scheme.

Based upon these fraudulent solicitations, WTG received approximately $19 million from at least 220 customers. WTG and Ramos misappropriated these funds to pay personal expenses, including salaries for Ramos and Carvajales. Though Ramos was indicted, he removed his ankle monitoring device and fled. The FBI has been unable to determine Ramos’ whereabouts and suspects he may have fled the country. Under the Consent Order announced today, Carvajales faces permanent trading and registration bans and must pay $2.4 million in restitution and an additional $1 million as a civil monetary penalty.

Throughout my time as a Commissioner, I have frequently advocated for greater customer protection for the most vulnerable investors in our marketplace.[1] As I have previously noted:

“I am deeply committed to raising alarms regarding fraud that targets vulnerable investors based on relationships, kinship, or other social network connections.  Affinity-based fraud schemes targeting vulnerable individuals within a specific community based on a shared characteristic seek to exploit the trust generated within the community.”[2]

In the current case, the fraudsters used a shared native language to gain the trust of their victims. Further, the fraudsters assured their customers that their investments would receive the protections available through registered trading activity.

The CFTC must take decisive action in cases where fraudsters target vulnerable investors by turning pillars of strength, such as shared identity or robust regulatory protections, into ammunition.

I applaud the efforts of the CFTC’s Division of Enforcement and would like to recognize the staff bringing this litigation: Nia Vroustouris, Kevin Samuel, Alison B. Wilson, and Rick Glaser.

[1] See, e.g., Kristin N. Johnson, Commissioner, CFTC, Statement Regarding CFTC Charges in “Pig Butchering” Case, Jan. 19, 2024, https://www.cftc.gov/PressRoom/SpeechesTestimony/johnsonstatement011924#_ftn8; Kristin N. Johnson, Commissioner, CFTC, Statement Regarding CFTC Consent Order Imposing $1.7 Billion in Restitution against South African Commodity Pool Operator (Sept. 7, 2023), https://www.cftc.gov/PressRoom/SpeechesTestimony/johnsonstatement090723; Kristin N. Johnson, Commissioner, CFTC, Statement Regarding CFTC Action Against Retail Forex Ponzi Scheme Targeting Spanish Speakers in Puerto Rico and the Continental United States, Feb. 14, 2023, https://www.cftc.gov/PressRoom/SpeechesTestimony/johnsonstatement021423.

[2] Kristin N. Johnson, Commissioner, CFTC, Statement on Enforcement Action To Stop Bitcoin Fraud Targeting the Spanish-Speaking Community, https://www.cftc.gov/PressRoom/SpeechesTestimony/johnsonstatement052423.