Daily fraud update: 12th June

CFTC secures fines in alleged church forex fraud case

A man who admitted defrauding members of his church and wider community has been told by a US court that he must pay back $890,000.

Brett G. Hartshorn, from Sarasota in the US state of Florida, had a case brought against him by the Commodity Futures Trading Commission (CFTC).

It centred on allegations that he solicited fraudulent forex investments from those in his community and church.

He falsely told many of the investors that he had profitable foreign exchange trading experience.

However, now the US District Court for the Southern District of New York has imposed a range of punishments on Hartshorn.

The court said that Hartshorn must now pay back restitution fees totalling $890,000.

It also said that he will be subject to registration and permanent trading bans.

In a press statement, the CFTC said that the case dates back to at least 2008.

“The order finds – and Hartshorn admits – that from at least June 18, 2008 to in or around 2014, Hartshorn fraudulently solicited at least 13 individuals, including members of his church, as well as individuals in the local community, to trade off-exchange forex,” it said.

“According to the order, Hartshorn falsely told most, if not all, of his clients that he had traded forex profitably on behalf of himself and others, that his clients could expect substantial profits if they permitted him to trade forex on their behalf, and that he would limit the risk of loss.”

However, this did not transpire, and some of Hartshorn’s clients found themselves significantly out of pocket.

“In reality, Hartshorn repeatedly employed risky trading strategies and suffered significant trading losses – often creating devastating single-day losses – on behalf of his clients,” the CFTC said.

Hartshorn, however, did not appear to suffer financially in the same way.

“The order finds that Hartshorn failed to disclose to clients that under his so-called ‘profit’ sharing agreement with clients, he could be, and often was, compensated even as his clients lost money trading,” it said.

“The order also finds that Hartshorn misappropriated the funds of at least two clients and failed to disclose that misappropriation to his other clients.”

The CFTC also explained that Hartshorn did not get the proper authorisation required to perform the work he did.

“The order further finds that Hartshorn failed to register as a commodity trading advisor (CTA) as required under the Commodity Exchange Act and CFTC regulations and that he violated various CTA requirements, including failing to produce certain documents to the CFTC that he was required to maintain,” it said.

There is also a related criminal case against Hartshorn making its way through the US District Court for the Middle District of Florida.

In that case, Hartshorn has pleaded guilty to “willfully making false statements to the FBI relating to his misappropriation of client funds,” the CFTC said.

Forex Fraud Analyst Team

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