Banking & Finance  January 22, 2018

Federal agency alleges Ponzi scheme by Longmont Bitcoin firm

WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission has filed a civil enforcement action against a Longmont resident and his company, alleging that they defrauded investors out of at least $1.1 million.

The federal agency announced the action, Jan. 18, in the U.S. District Court for the Eastern District of New York against defendants Dillon Michael Dean of Longmont and his company, The Entrepreneurs Headquarters Ltd., a company registered in the United Kingdom.

Dean did not respond to attempts to reach him through his Facebook account or Youtube page.

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The complaint alleges that Dean and TEH engaged in “a fraudulent scheme to solicit Bitcoin from members of the public, misrepresenting that customers’ funds would be pooled and invested in products including binary options, making Ponzi-style payments to commodity pool participants from other participants’ funds, misappropriating pool participants’ funds, and failing to register with the CFTC as a Commodity Pool Operator (CPO) and Associated Person of a CPO, as required,” the commission stated in a press release.

“Increased public interest in Bitcoin and other virtual currencies has provided new opportunities for bad actors,” James McDonald, the CFTC’s director of enforcement, said in the prepared statement. “As alleged in the complaint, defendants sought to take advantage of that public interest, offering retail customers the chance to use Bitcoin to invest in binary options, when in reality they were only buying into a Ponzi scheme. As this case shows, the CFTC will continue to take swift action to stop such fraudulent schemes and to hold fraudsters accountable for their misconduct.”

The civil action alleges that, beginning in April 2017, Dean and TEH “solicited at least $1.1 million worth of Bitcoin from more than 600 members of the public. Defendants allegedly promised to convert this Bitcoin into fiat currency to invest on the customers’ behalf in a pooled investment vehicle for trading commodity interests, including trading binary options on an online exchange designated as a contract market by the CFTC. Potential pool participants were solicited to invest with defendants by false claims of trading expertise and promises of high rates of return.”

The complaint further alleges that, rather than convert customers’ Bitcoin to fiat currency to invest in binary options contracts, as promised, the defendants misappropriated their customers’ funds, including by using the funds to pay other customers, in the manner of a Ponzi scheme, the commission said.

The CFTC alleges that the defendants solicited customer deposits using company websites, YouTube videos, and Facebook posts.

The complaint alleges that the defendants were not actually engaged in trading on behalf of their customers, that their purported trading profits were fictitious, and that the defendants “stopped making payments to their customers, having misappropriated over $1 million in customers’ funds, while Dean has launched another similar purported trading venture under the name Real Trade Profits, using a website to solicit customers to deposit Bitcoin for a pooled investment in binary options trading and promising high rates of return.”

The CFTC is seeking “restitution to defrauded persons, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC Regulations, as charged.”

The Boulder Daily Camera reported in December that investors from around the world were warning about TEH, including through a 270-member Facebook group.

 

WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission has filed a civil enforcement action against a Longmont resident and his company, alleging that they defrauded investors out of at least $1.1 million.

The federal agency announced the action, Jan. 18, in the U.S. District Court for the Eastern District of New York against defendants Dillon Michael Dean of Longmont and his company, The Entrepreneurs Headquarters Ltd., a company registered in the United Kingdom.

Dean did not respond to attempts to reach him through his Facebook account or Youtube page.

The complaint alleges that Dean…

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