Florida-based firms and owner settle $1.8 million mid-trial lawsuit over fraudulent Forex and digital asset scheme – Alan Friedland – Fintech Investment Group – Compcoin.
Washington, DC (STL.News) The Commodity Futures Trading Commission (CFTC) announced yesterday that the U.S. District Court for the Intermediate District of Florida has issued an order for permanent injunctive relief, monetary penalties, and equitable relief against Alain Friedland of Florida and its Florida-based companies, Fintech Investment Group, Inc. (fintech), and Compcoin LLCfor fraudulently soliciting clients to purchase a digital asset that they had falsely promised would allow clients access to a proprietary foreign exchange (forex) trading algorithm.
The order compels the defendants to pay $1,200,000 in restitution and a civil penalty of $600,000. Additionally, the order imposes a permanent ban on Friedland, Compcoin LLC, and Fintech from soliciting or trading commodity interest or registering with the CFTC in any capacity.
The jury trial began on January 31, 2022. Without admitting or denying the allegations in the complaint, the defendants consented to settle all claims when the case was presented by the CFTC on the fourth day of the trial.
“This case demonstrates that the CFTC will continue to focus on protecting customers and vigorously litigate the cases it files for appropriate relief,” CFTC Acting Director of Enforcement Vincent McGonagle said. “As required by the Commodity Exchange Act and CFTC regulations, commodity trading advisors must ensure that they provide accurate and complete information to potential clients so that they can make decisions. informed before entering into a counseling relationship.”
Background to the case
According to the order, which adopted findings of fact and findings of law agreed to by the parties, from approximately 2016 to 2018, Friedland and his companies fraudulently solicited customers and potential customers to purchase a digital asset known as of Compcoin. The defendants falsely promised, among other things, that Compcoin would allow customers to access what they described as Fintech’s proprietary forex algorithmic trading program known as ART.
In the solicitation documents, the defendants stated, among other things, that the ART trading algorithm was “complete in form and function” and “ready for release to the open market.” Defendants also stated that “ART’s high success rate in predicting forex trades, coupled with the high rate of return on such trades, will drive demand from investors and traders to purchase and use Compcoin. , in particular to access ART”.
As stated in the order, the defendants knew that clients could not legally use ART until Fintech received approval for its disclosure documents from the National Futures Association (NFA). Nonetheless, the defendants offered Compcoin before Fintech sought NFA approval for its disclosure materials. Although defendants touted ART’s successful performance, they knew that its performance, which was referenced in the solicitations, was based largely or entirely on hypothetical performance results and not actual transactions. Defendants were also aware that the Compcoin LLC website and solicitations did not contain the required disclaimer for simulated or hypothetical performance. Ultimately, the NFA did not approve Fintech’s risk disclosure statements, and Compcoin buyers never got access to the supposedly highly profitable forex trading algorithm as promised. Instead, Compcoin buyers were left with a worthless digital asset.
The CFTC warns that orders requiring the return of funds to victims may not result in the recovery of lost money because wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for customer protection and to ensure that wrongdoers are held accountable.
The CFTC thanks the NFA and the Financial Markets Authority of New Zealand for their assistance in this matter.
The Enforcement Division staff responsible for this action are Janine Gargiulo, Gabriella Geanuleas, Katherine Rasor, Jacob Mermelstein, Christopher Giglio, K. Brent Tomer, Lenel Hickson, and Manal M. Sultan.
The following CFTC staff also assisted in this case: Patrick Daly (Division of Enforcement), David W. Oakland (Division of Enforcement), and Salma Mack (Division of Data).