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CFTC Charges Entities and Individuals With Multi-Million Dollar Forex Fraud

The Commodity Futures Trading Commission announced today that it has filed a civil enforcement action in the U.S. District Court for the District of New Jersey against WorldWideMarkets, Ltd.TAB Networks, Inc.Thomas Plaut of Saddle River, N.J., and Arthur Dembro of New York, N.Y., charging them with fraud and other violations.

The complaint alleges that the two companies, acting as a common enterprise under Plaut’s control from an office in Woodcliff Lake, N.J., operated a long-running scheme from approximately March 2012 through September 2018 that defrauded retail forex customers worldwide. Dembro, who was the Chief Financial Officer of both companies, is alleged to have aided and abetted the fraud.

The complaint also states that WorldWideMarkets ignored CFTC registration requirements and customer-protection rules and ultimately went defunct after systematically misappropriating at least $4.7 million of customer funds.

“This complaint underscores the critical importance of the CFTC’s registration requirements and that market participants comply with applicable customer protection regulations,” said Acting Director of Enforcement Vincent McGonagle. “It should come as no surprise that a company that avoided a requirement to maintain sufficient levels of adjusted net capital would become insolvent after operating in a Ponzi-like manner for years.”

Case Background

The complaint alleges that WorldWideMarkets, with TAB Networks performing substantially all of its business activities, acted as the counterparty to forex transactions with at least 14,000 retail customers between 2012 and 2018. The complaint states that although the companies operated out of a New Jersey office, Plaut organized WorldWideMarkets in the British Virgin Islands for the purpose of evading U.S. registration and customer protection regulations that apply to retail forex dealers.

According to the complaint, WorldWideMarkets did not maintain sufficient levels of adjusted net capital; it did not maintain assets equal to its retail forex obligation in a financial institution in a money center country; and it also falsely misrepresented to all of its customers that WorldWideMarkets would hold their money “safely” in “segregated accounts.” In addition, the complaint alleges that from approximately March 2012 through 2018, WorldWideMarkets’ misappropriated a minimum of $4.7 million from customers by improperly using customer assets to pay operating expenses, employee salaries and benefits, and to make cash distributions to Plaut.

The Division of Enforcement thanks and acknowledges the assistance of the U.S. Securities and Exchange Commission and the British Virgin Islands Financial Services Commission.

The Division of Enforcement staff members responsible for this case Joseph Platt, Joseph Patrick, Joseph Konizeski, Scott Williamson, and Robert Howell and former staff members Camille Arnold and Lindsey Evans.

 

CFTC’s Forex Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories and Articles that provide the warning signs of fraud, including the Foreign Currency Trading (Forex) Fraud Advisory, which alerts customers to forex fraud and lists simple ways to spot forex scams.

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

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