Following a guilty plea to one count of wire fraud, Kholamian was sentenced to 48 months in prison and ordered to pay $755,000 in restitution.
The U.S. District Court for the Northern District of Illinois entered a consent order for a permanent injunction, monetary sanctions, and equitable relief against Dro Kholamian and his company, Blue Star.
The consent order follows charges put forth by the CFTC against the defendants for solicitation fraud and misappropriation of client funds, as well as failing to register with the CFTC as a commodity trading advisor and an associated person.
The order requires Kholamian and Blue Star to pay $227,000 in restitution to victims of their scheme and to pay a $150,000 civil monetary penalty.
The CFTC found that, from January 2013 through November 2018, Dro Kholamian and his firm Blue Star solicited and accepted $995,000 from clients for futures and/or forex trading.
Kholamian sought out some clients through his connection with his Armenian church and social contacts of Armenian heritage and ran a Ponzi scheme to pay for his personal and business expenses. Blue Star returned $768,000 to their clients but misappropriated $227,000.
In a separate action, the U.S. Attorney’s Office for the Northern District of Illinois indicted Kholamian, on nine counts of wire fraud, with criminal charges including the same scheme to defraud forex and commodity clients as charged in the CFTC’s case.
Following a guilty plea to one count of wire fraud, on September 3, 2021, Kholamian was sentenced to 48 months in prison and ordered to pay $755,000 in restitution.
Earlier this month, the CFTC charged Dwayne Golden, Jatin Patel, Marquis Egerton, and Gregory Aggesen with fraud for operating Ponzi schemes involving bitcoin.
The individuals have solicited more than $44 million of investments and misappropriated millions of dollars, according to the complaint, which seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans.
The CFTC claims that Golden, Patel, and Egerton operated the websites Empowercoin and Ecoinplus, which have raised more than $23 million of bitcoin and misappropriated $9.8 million worth of bitcoin.
In addition, Golden, Patel, Aggesen, and an accomplice, operated the website JetCoin, which raised another $21 million of bitcoin and misappropriated approximately $7.8 million worth of Bitcoin.
In exchange, the websites promised that professionals would trade their bitcoin with profits being paid daily. In a typical Ponzi scheme, customer’s bitcoins were either misappropriated or used to make supposed profit payments.