CFTC Charges New Mexico Resident with Fraud in Long-Running Ponzi Scheme

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CFTC Charges New Mexico Resident with Fraud in Long-Running Ponzi Scheme

December 15, 2019

CFTC - Long-Running Ponzi SchemeWashington, DC –CFTC Charges New Mexico Resident with Fraud in Long-Running Ponzi Scheme.  The U.S. Commodity Futures Trading Commission today announced it has filed a civil enforcement action in the District of New Mexico against defendant Douglas Lien (d/b/a Westend Investments) of Santa Fe, New Mexico, charging him with fraud and failing to register with the CFTC.

According to the complaint, starting in at least 2002, Lien solicited and accepted funds from friends and acquaintances for the purpose of trading commodity futures contracts, primarily U.S. Treasury bond futures. The complaint alleges that since at least September 2014, Lien accepted at least $827,650 from his clients, issued periodic account statements showing false trading profits, and reported more than $1.6 million in profits on annual tax forms he issued to clients. In reality, during that time, Lien made no deposits into his futures trading account and placed only three trades in commodity futures contracts, for a combined loss of approximately $200, according to the complaint. The complaint also alleges that Lien misappropriated client funds, using them to pay other clients, in the manner of a Ponzi scheme, and for management fees, he charged based on false trading profits.

The complaint further alleges that throughout 2019, several of Lien’s clients have requested the return of their funds, but Lien has strung clients along with false excuses. According to the complaint, Lien falsely advised clients that a broker placed client funds in long-term investments that Lien cannot access without incurring penalties, when, in fact, no client funds are, or were, locked up in such investments.

Additionally, the complaint charges that Lien acted in a capacity requiring him to register with the CFTC and that he failed to do so.

In its continuing litigation, the CFTC seeks restitution to defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act, as charged.

The Division of Enforcement staff members responsible for this case are Stephanie Reinhart, Susan Padove, Bryan Hsueh, Joseph Patrick, David Terrell, and Scott Williamson.

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