Patrick Rakotonanahary, President/CEO of Cyber Market Group LLC, ARRESTED for Fraud in Conjunction with Ponzi Scheme
Typical Ponzi Scheme Involving Misleading of Customers, Misappropriation of Customer Funds, and False Account Statements Leads to Arrest of Patrick Rakotonanahary of Cyber Capital
March 15, 2010 – In a 23-page Complaint, CFTC alleged that Patrick Rakotonanahary (Rakotonanahary) and his Punta Gorda, Florida forex firm Cyber Market Group LLC (Cyber Market) fraudulently solicited money from public investors, claiming that they would use the money to trade off-exchange foreign currency contracts (Forex), in yet another typical ponzi scheme. Rakotonanahary and Cyber Market are not registered with CFTC, nor are they members of any registered futures association.
On March 15, Rakotonanahary was arrested. Additionally, the United States Attorney’s Office for the District of Hawaii (USAO) filed a criminal indictment again him for fraud, and the Department of Commerce and Consumer Affairs, Office of the Securities Commission (the DCCA) filed an administrative complaint aginst him.
Here are some highlights from the Complaint:
- Rakotonanahary, who holds himself out as the president/CEO of Cyber Market, promised returns for his clients from 4-10%, although his firm did not have the funds to make these payments
- Rakotonanahary made payments to his clients which he claimed were a result of profitable forex trading, when, in fact, the returns were simply money from the client’s own funds or other clients’ funds (this is called misappropriation of funds)
- Rakotonanahary and his firm made false claims about not losing money in forex trading for seven years and also failed to give his clients appropriate risk disclosure
- Rakotonanahary and his firm sent false account statements to clients which stated that their clients’ funds totaled $8 million, when, in reality, Rakotonanahary’s and his firm’s bank and trading accounts contained about $60,000
- Rakotonanahary and Cyber Market have not repaid their clients the total of their principal investments, despite their right to be repaid
- CFTC seeks permanent injunction against further violations of federal commodities laws against Rakotonanahary and Cyber Market, as well as fines, trading and registration banks, and repayment to customers.
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Release: 5797-10
For Release: March 16, 2010
CFTC Charges Florida Man and Cyber Market Group LLC with Operating a Multi-Million Dollar Ponzi Scheme in Hawaii and Elsewhere in the U.S.
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that it charged Patrick Rakotonanahary and Cyber Market Group LLC (Cyber Market), both of Punta Gorda, Florida, with operating a multi-million dollar foreign currency (forex) Ponzi scheme in Hawaii and elsewhere in the United States.
On March 15, 2010, the CFTC held a press conference in Honolulu, Hawaii with the United States Attorney’s Office for the District of Hawaii (USAO), the Federal Bureau of Investigation (FBI) and the State of Hawaii, Department of Commerce and Consumer Affairs, Office of the Securities Commissioner (the DCCA) and announced that this action resulted from a joint CFTC cooperative enforcement investigation with these agencies.
The CFTC’s lawsuit, filed on March 15, 2010, in the U.S. District Court for the District of Hawaii, charges that, since at least June 2008, Rakotonanahary, the president and Chief Executive Officer of Cyber Market, and Cyber Market induced customers to purportedly loan them money to trade forex on their behalf. The CFTC complaint alleges that the defendants promised customers weekly payments of four percent to 10 percent from the forex trading, knowing that they lacked the funds to make such payments. The complaint further alleges that the defendants falsely represented to customers that the payments were derived from profitable forex trading. In reality, however, these payments were made from customers’ own funds and/or the funds deposited by other clients.
According to the complaint, the defendants also misappropriated client funds for their own personal use. In addition, Rakotonanahary and Cyber Market allegedly misrepresented that they had not lost funds in seven years of trading forex and provided false statements to investors, showing a balance of more than $8 million in Cyber Market’s forex trading account when, in fact, the account contained less than one percent of that amount.
In its continuing litigation, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans and permanent injunctions against further violations of the federal commodities laws.
Rakotonanahary Charged with Fraud by Criminal and State Authorities
The CFTC notes the arrest of Rakotonanahary on March 15, 2010, and commends the USAO’s filing of a criminal indictment against Rakotonanahary, charging him with fraud in connection with this scheme, and the filing by the DCCA of an administrative complaint against Rakotonanahary in connection with this scheme. The CFTC wishes to thank the USAO, the FBI and the DCCA for their assistance in this matter.
The following CFTC Division of Enforcement staff members are responsible for this case: Philip Rix, Elizabeth C. Brennan, Steven Ringer, Lenel Hickson, Vincent McGonagle and Stephen J. Obie.
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Other related forex law articles include:
- Frontline Financial, Inc. Permanently Banned From NFA; Owner Charles G. Rice Must Withdraw From NFA for 5 Years
- CFTC Charges Texas-Based Willie Lee Cloud, Jr., Principal & Agent of C & R Financial, with Operating Ponzi Scheme
- CFTC Stops Another Forex Ponzi Scheme
- Failure to Comply with NFA Rules Could Result in NFA Membership Suspension of Expulsion and/or Fines
- NFA Interpretive Notice Re: Past or Projected Performance
- Forex Dealer Member Barred From Industry
- Retail Forex Registration Regulations Proposed
- Series 34 Exam
Bart Mallon, Esq. of Mallon P.C. runs the Forex Law Blog and provides forex registration service through forexregistration.com. Mr. Mallon also runs the Hedge Fund Law Blog. He can be reached directly at 415-868-5345.
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