A federal court in New York concluded a seven-year legal fight by ordering Daniel Winston LaMarco to pay more than $3.4 million for running a Ponzi-style foreign exchange scheme.

According to the CFTC report, the ruling imposed heavy financial penalties on the New York City resident and permanently barred him from any future commodity-related activities.

Final Judgment and Permanent Ban

The U.S. District Court for the Eastern District of New York ordered LaMarco to pay $862,600 in restitution to victims and a $2,587,800 civil penalty. Judge Diane Gujarati’s order also permanently banned him from the commodities industry and prohibited future violations of the Commodity Exchange Act.

The case began in July 2017 when the Commodity Futures Trading Commission (CFTC) filed a complaint accusing LaMarco and his company, GDLogix, Inc., of misleading investors and misusing their funds. Earlier rulings found him liable for both forex and commodity pool operator fraud.

How the Scheme Worked

Court findings reportedly showed LaMarco raised nearly $1.5 million from friends and acquaintances, claiming he would trade forex contracts through a commodity pool.

He lost most of the money through personal trading and redirected more than $630,000 as fake “profits” to some participants, operating in the manner of a Ponzi scheme.

Magistrate Judge James M. Wicks’ report concluded LaMarco misappropriated funds, lied to investors, and conducted no trading on their behalf. GDLogix faced a parallel default judgment with identical penalties and lifetime bans.

The court also sanctioned LaMarco for filing repeated false and defamatory claims against the CFTC and its lawyers, and for making threats toward counsel. Judges struck the offending materials from the record, citing bad faith conduct and describing his threats as “inexcusable.”

Criminal Conviction and Prison Time

The civil case followed a criminal prosecution in which LaMarco pleaded guilty in 2017 to commodities fraud and wire fraud. He was sentenced to 42 months in prison and ordered to pay $872,600 in restitution.

The CFTC cautioned that victims might not recover funds if the defendant lacked assets. The agency said it would continue to pursue enforcement actions to protect investors.

Source: Finance Magnates