Federal Court in Nevada Orders Commodity Futures Software Vendor to Pay More than $674,000 for Solicitation Fraud and Failing to Register with the CFTC
June 28, 2018
Washington, DC – The Commodity Futures Trading Commission (CFTC) announced today that the Honorable Gloria M. Navarro of the U.S. District Court for the District of Nevada (Las Vegas) entered an Order of Summary Judgment against Defendant Mirko (Mick) Schacke of Brentwood, California (formerly Antioch, California), and a Default Judgment against Schacke’s company, TradeMasters USA, LLC of Las Vegas, Nevada.
The Order, entered on June 22, 2018, amends a previous order entered on September 13, 2017, and finds that the Defendants committed fraud in their solicitations of futures trading software customers, failed to register with the CFTC and failed to provide required disclosures to investors. The Court’s Order also requires Schacke and TradeMasters, jointly and severally, to pay disgorgement of $168,626 to defrauded customers and a $505,878 civil monetary penalty.
The Order also imposes permanent trading and registration bans against Schacke and TradeMasters and prohibits them from committing further violations of the Commodity Exchange Act and CFTC Regulations, as charged.
The Order arises from a CFTC enforcement anti-fraud action filed against Schacke and TradeMasters on August 15, 2016 (see CFTC Complaint and Press Release 7429-16).
The Court’s Order finds that Schacke and TradeMasters fraudulently solicited and accepted $168,626 from 39 customers who purchased TradeMasters’ automated futures trading software licenses for as little as $1,500 and as much as $20,000. The Order further finds that Schacke and TradeMasters made false statements regarding the trading performance of TradeMasters and its software to the public via the TradeMasters’ website and other means, such as: a 300% return was earned in just three months by a “real customer,” and TradeMasters software users generate a monthly income of $5,000 to $10,000, when, in fact, the TradeMasters’ software did not work, and users lost money. According to the Order, Schacke and TradeMasters also misrepresented that TradeMasters’ “coaches” have more than two decades of trading experience, when Schacke was the only coach and he had no prior trading experience; trading results presented as actual trading profits, in fact, were only hypothetical; and video testimonials were from “real customer[s],” when they were instead from paid actors.
The Court’s Order also finds that Schacke personally executed trades for three customers despite TradeMasters and Schacke not obtaining the required registrations to do so, and TradeMasters failed to provide the required disclosures concerning client testimonials on the TradeMasters website.
The CFTC cautions that Orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
CFTC Division of Enforcement staff members responsible for this action are Joseph Patrick, Susan B. Padove, Susan Gradman, Scott R. Williamson, and Rosemary Hollinger.
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CFTC’s Fraud Advisories, Including Commodity Trading Systems Sold on the Internet
The CFTC has issued several customer protection Fraud Advisories that provide warning signs of fraud, including the Commodity Trading Systems Sold on the Internet Advisory, which 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.
Source: CFTC.gov
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