Calif. man's assets frozen by CFTC
WASHINGTON (Legal Newsline) - The U.S. Commodity Futures Trading Commission entered an emergency order on Friday freezing the assets of Victor Yu of San Jose, Calif., and his company, VFRS.
The order was entered in the U.S. District Court for the Northern District of California based in Alameda, Calif.
The order also prohibits the destruction or alteration of books and records, and grants the CFTC immediate access to such documents. The judge set a hearing on the CFTC's motion for a preliminary injunction for Aug. 10.
This is the result of a civil enforcement action filed by the CFTC on Thursday charging defendants Yu and VFRS with defrauding at least 100 clients in connection with off-exchange foreign currency (forex) trading.
According to the CFTC, from about August 2009 to the present, the defendants' clients invested more than $5 million in forex trading accounts and lost more than $2 million, while defendants received fees of more than $270,000 from their clients.
The defendants allegedly fraudulently solicited clients to open forex accounts that allowed the defendants to place trades in their accounts using trading software that Yu claimed to have developed.
The software was misrepresented as making forex trading "extremely safe," preventing clients from ever reaching certain loss thresholds, and guaranteeing that clients will not have a losing trade, according to the complaint. Defendants allegedly misrepresented to some prospective customers that their trading software had shown positive returns on every trade it had ever made and has successfully predicted activity in the currency markets back to the 1920s.
Yu and VFRS, by and through Yu, met with prospective clients in their homes by obtaining leads primarily through word-of-mouth, according to the complaint. Yu allegedly promised existing clients a referral fee or a percentage of any profits earned in the new clients' forex accounts.