CFTC Charges Illinois Resident Husam Tayeh, Dinar Corp., Inc., and My Monex, Inc. with Fraud and Other Violations Involving Foreign Currency Scheme
Federal Court Issues Emergency Order Freezing Assets and Protecting Books and RecordsWashington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today announced the unsealing of a civil enforcement action filed in the U.S. District Court for the Middle District of Alabama, charging Husam Tayeh of Oak Lawn, Illinois; Dinar Corp., Inc. (DCI), a Nevada corporation; and My Monex, Inc. (Monex NV), a Nevada corporation (collectively, the Defendants), with operating a fraudulent scheme involving foreign currency (forex), and failing to register with the CFTC as required by federal law. The CFTC Complaint further names Theodore S. Hudson, II and his company My Monex, Inc., an Alabama corporation (Monex AL), both of Dothan, Alabama, as Relief Defendants.
The CFTC Complaint was filed under seal on July 27, 2015, and that same date U.S. District Judge Myron H. Thompson issued an emergency Order freezing and preserving assets under Defendants’ and Relief Defendants’ control and prohibiting them from destroying documents or denying CFTC staff access to their books and records. The Court scheduled a hearing for August 10, 2015, on the CFTC’s separate motion for a preliminary injunction.
The Complaint alleges that beginning from at least January 2012 and continuing to the present (the relevant period), Tayeh, DCI, and Monex NV engaged, and are engaging, in a fraudulent scheme involving the offering of agreements, contracts or transactions in off-exchange forex on a leveraged, margined, or financed basis to retail customers who were not eligible contract participants (ECPs) and that do not result in actual delivery of forex within two (2) days of the transaction date(s). Defendants, who have never been registered as required with the CFTC, have engaged in more than $8 million of these illegal, off-exchange retail forex transactions.
Tayeh created and operates DCI and Monex NV, business entities that he uses to facilitate the Defendants’ fraudulent activities and that act as the counterparty(s) in the subject agreements, contracts or transactions in forex. Defendants operate their fraudulent scheme via the Internet through the use of their website, by offering, and entering into, transactions in forex with non-ECP retail customers that are leveraged, margined or financed by the Defendants, and that result in actual delivery of forex – if at all - within periods of not less than 15 days and as much as 120 days following the date of the transaction(s).
The Complaint further alleges that in furtherance of the fraudulent scheme, Tayeh, individually and on behalf of DCI and Monex NV, made, and continues to make, material misrepresentations and omit material facts in solicitations to actual and prospective customers via the website, including but not limited to: (1) representing that DCI operates a “fully licensed and fully compliant licensed money services business” but failing to disclose that DCI has been served with cease and desist orders in the states of Texas and Illinois for operating without required licenses; (2) representing that DCI and Monex NV provide the “best price guaranteed” and the “best prices up front all the time” but failing to disclose that the forex transactions they offer to retail customers include significant finance charges; (3) failing to disclose that DCI and Monex NV are each operating as a registered foreign exchange dealer (RFED) without being registered with the Commission as required; and (4) failing to disclose that Tayeh is acting as an associated person (AP) of an RFED(s) without being registered with the CFTC as required. Relief Defendants Hudson and Monex are alleged to have accepted funds from the Defendants to which they have no legitimate claim.
In its continuing litigation, the CFTC seeks restitution to defrauded customers, disgorgement of ill-gotten gains, a civil monetary penalty, permanent registration and trading bans, and a permanent injunction against future violations of federal commodities laws, as charged.
The CFTC appreciates the assistance of the Office of the United States Attorney for the Middle District of Alabama, the Alabama Securities Commission, the Federal Bureau of Investigation, the Dothan Alabama Police Department, and the Houston County Alabama Sheriff’s Office.
CFTC Division of Enforcement staff members responsible for this action are Timothy J. Mulreany, JonMarc P. Buffa, Kyong J. Koh, Patricia A. Gomersall, Joanna M. Lara, Tashieka Taylor, and Paul G. Hayeck, as well as Jeremy Christianson from the Office of Data and Technology.
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CFTC’s Foreign Currency (Forex) Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency Trading (Forex) Fraud Advisory, which states that the CFTC has witnessed a sharp rise in Forex trading scams in recent years and helps customers identify this potential fraud.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
Last Updated: August 3, 2015