CFTC Obtains Final Judgment Against Michigan Commodity Pool ……
Washington, D.C. — The Commodity Futures Trading Commission today announced that Judge Matthew F. Leitman of the U.S. District Court for the Eastern District of Michigan entered an order of default judgment and permanent injunction against Ali Bazzi and his company Welther Oaks, LLC, both of Dearborn, Michigan, for misappropriating funds, fraudulent solicitation, and issuing false account statements. The court’s order requires Bazzi and Welther Oaks, jointly and severally, to pay a $441,232 civil monetary penalty, imposes permanent trading and registration bans against them, and prohibits them from violating provisions of the Commodity Exchange Act (CEA), as charged.
The order, entered on December 13, stems from a CFTC complaint filed on August 17, 2021. [See CFTC Press Release 8415-21] The order finds that starting in approximately March 2018, Welther Oaks and its owner and controlling person, Ali Bazzi, fraudulently solicited at least $540,047 from at least 35 participants for a commodity pool that would purportedly trade leveraged or margined forex. According to the order, to entice participants, Bazzi and Welther Oaks falsely represented that they had made large profits trading forex; the solicited money would be used to trade forex; pool participants would realize guaranteed profits as high as 15 percent per month on their funds without losses; and participants could withdraw their funds at any time.
The order further finds that Bazzi and Welther Oaks used only a small fraction of the funds they collected to trade forex and concealed their fraud by issuing false account statements to participants that purported to show trading profits. The order additionally finds that the defendants misappropriated at least $439,644 of participants’ funds to spend on automobiles, jewelry, retail purchases, meals, entertainment, and travel for Bazzi.
Parallel Criminal Action
Bazzi entered a guilty plea in a related criminal case in the U.S. District Court for the Eastern District of Michigan on August 17, 2021. On May 4, 2022, he was sentenced to thirty-three months in prison and ordered to pay $441,231.53 in restitution. (See United States v. Bazzi, 2:21-cr-20348-DML-DRG)
The CFTC cautions that orders requiring payment of funds to victims may not result in the recovery of any money lost because 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.
The CFTC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of Michigan and the FBI’s Detroit Field Office in this matter.
The Division of Enforcement staff members responsible for this case are Jon J. Kramer, Joseph J. Patrick, David A. Terrell, Scott R. Williamson, and Robert T. Howell.
CFTC’s Foreign Currency (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 (Forex) Trading Fraud Advisory, which alerts customers to forex fraud and lists simple ways to spot forex scams.
The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.
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.