The US Commodity Futures Trading Commission, or CFTC, has continued its efforts to try and put an end to Forex fraud within the US. As the latest expression of this, the regulator had launched a legal action against Erik Jon Hass, Principal and agent of Simply Gains, as well as Simply Gains itself.
The Usual Story
According to the complaints leveled by the CFTC, which was submitted in the District Court of Oregan, Hass has operated a fraudulent scheme from March 2013 to about February 2019. During this time, Hass had, either individually or through Simply Gains, solicited and subsequently accepted funding worth $2.1 million.
He did this from 21 individuals, doing so under the pretense of a pooled investment vehicle within off-exchange leveraged forex contracts. It’s alleged that the defendants proceeded to misappropriate a minimum of $415,000 of this funding that was deposited by the pool participants.
The Many sins
As is usual for such cases, the defendants had allegedly claimed to have made large amounts of profits for both themselves and for the other pool participants, doing so through forex trading. It was claimed that these pool participants would gain earnings of 2% per month, which is admittedly a believable thing to say, unlike most scams of this sort.
The Defendants went further, falsely claiming they would donate a further 0.5% of these gains to charities per month, donating to a charity of the pool participants’ choice. Another misrepresentation came from the defendants falsely promising these pool participants that they would be capable of withdrawing their funds at a 60-day notice without any form of loss on principle and profits.
The defendants further omitted various material facts, such as the fact that only a portion of the pool participants’ funds was being traded, and that Hass lost money trading Forex on the regular. Further omissions came from the fact that they declined to reveal that neither of the defendants was registered with the CFTC, which is required by federal law.
Mortgages And Cruises
The reality of the matter is that the defendants managed to fail to trade the funds of the pool participants, as promised, and instead misappropriated a large portion of the money, losing the rest by trading with no stop loss. Further offenses involve the comingling of investor funds with Hass’s funds, then using that to pay the salaries of Hass and his wife.
As one would imagine, that was never disclosed to the pool participants. Further expenditures include the mundane, such as paying Hass’s mortgage, to the lavish, such as paying for a Caribbean cruise. Other amounts were paid to the Pool Participants in a manner like a Ponzi scheme.