The Commodity Futures Trading Commission (CFTC) has recently announced a significant legal development in its ongoing efforts to combat fraudulent practices in the financial markets.
Judge Carlos E. Mendoza of the U.S. District Court for the Middle District of Florida has issued a default judgment against Avinash Singh and his company, Highrise Advantage, LLC, marking a decisive victory for the regulatory authority.
This default judgment is the culmination of a civil enforcement action initiated by the CFTC on September 9, 2020.
The action targeted Singh, Highrise, and eight other defendants, aiming to address their involvement in a multi-level, multi-million dollar off-exchange foreign currency (forex) scheme.
The court’s ruling has now brought this case to a close, determining that Singh engaged in fraudulent solicitation and fund misappropriation through Highrise and its associated commodity pools.
As a result of this judgment, Singh and Highrise are subject to a permanent injunction that prohibits them from engaging in activities that violate the Commodity Exchange Act and CFTC regulations.
Additionally, they are ordered to pay restitution and civil monetary penalties amounting to $25,558,594 and $76,675,782, respectively.
Furthermore, they are permanently banned from registering with the CFTC and participating in trading on any registered entity.
The court’s findings reveal that Singh and Highrise collected approximately $58 million from investors and feeder funds.
Shockingly, only a fraction, less than $2.5 million, was used for actual forex trading, while over $25 million was misappropriated.
Investor funds were diverted for Ponzi-type payments and personal expenses, and false profit statements were provided to deceive investors and feeder funds.
Additionally, the court’s judgment extends to operators of the four feeder commodity pools associated with Highrise: SR&B Investment Enterprises, Inc., Green Knight Investments, LLC, Bull Run Advantage, LLC, and King Royalty, LLC.
Consent orders have been entered against them, resolving the litigation.
In a related development, the CFTC has also secured a ruling against Phillip Galles and his affiliated entities, including Tyche Asset Management LLC, for their involvement in a Ponzi scheme within the commodity pool sector.
The court’s decision holds Galles accountable for defrauding investors, misappropriating funds, and making false claims of extraordinary returns.
It imposes a substantial financial penalty and imposes a permanent trading ban on regulated markets.
While these legal actions represent significant steps toward protecting investors and maintaining market integrity, the CFTC issued a cautionary note that the recovery of lost funds is not guaranteed through repayment orders.
These cases underscore the CFTC’s commitment to enforcing regulations and holding wrongdoers accountable in the financial industry.