CFTC files suit against The Traders Domain scammers

Oct.14, 2024 in companies, OmegaPro, regulation

US authorities have finally taken action against The Traders Domain Ponzi scammers.

On September 30th the CFTC filed suit against Traders Domain FX LTD and several additional corporate and individual defendants.

While The Traders Domain itself wasn’t an MLM opportunity, the scam is of interest to BehindMLM due to several MLM Ponzis feeding into it. The Traders Domain was also promoted by several well-known MLM figures.

All up there are sixteen named defendants in the CFTC’s The Traders Domain lawsuit;

Traders Domain FX LTD., dba The Traders Domain, St. Vincent and the Grenadines shell company
Fredirick Teddy Joseph Safranko, aka Ted Safrank (right), co-founder of The Traders Domain
David William Negus-Romvari, co-founder of The Traders Domain
Ares Global LTD., dba TruBlueFX, Saint Lucia shell company
Algo Capital LLC, Miami shell company
Algo FX Capital Advisor LLC, nka Quant5 Advisor LLC, Delaware shell company
Robert Collazo Jr., co-owner of Algo FX Capital Advisor LLC
Juan Herman, aka JJ Herman, co-owner of Algo FX Capital Advisor LLC
John Fortini, Vice President of Algo FX Capital Advisor LLC
Steven Likos, Algo FX Capital Advisor LLC sales rep
Michael Shannon Sims, aka Mike Sims, The Traders Domain promoter and insider
Holton Buggs Jr., The Traders Domain promoter
Centurion Capital Group INC, Florida shell company
Alejandro Santiestaban, aka Alex Santi, co-owner Centurion Capital Group INC
Gabriel Beltran co-owner of Centurion Capital Group INC, and
Archie Rice, Centurion Capital Group INC sales rep

As alleged by the CFTC;

From at least November 2019 through present, Traders Domain FX LTD. d/b/a/ The Traders Domain, by and through its officers, employees, and agents, (“TD”) and its co-owners Frederick Teddy Joseph Safranko a/k/a/ Ted Safranko (“Safranko”) and David Negus-Romvari (“Negus-Romvari”), individually and as controlling persons of TD (collectively, the “TD Defendants”) orchestrated a multi-layered scheme to solicit funds for the purpose of trading leveraged or margined retail commodity transactions … as well as assorted other commodities, through pooled and individual accounts.

What made The Traders Domain a Ponzi scheme is the represented trading, and associated profits, was all a sham.

TD misappropriated customer funds by accepting customer money via third party bank accounts, payment processors, and crypto wallets, but failing to use at least some of those funds to trade XAU/USD and by charging commissions on purported trading profits that did not exist.

And after The Traders Domain, the fraud continued through Ares Global and TruBlueFX.

In addition, TD, and later it’s successor in interest Ares Global d/b/a/ Trubluefx (“Trubluefx”), misappropriated customer funds by failing to return customer funds despite repeated attempts by thousands of customers to access and/or liquidate their accounts.

TD and Safranko also falsified trading records, and the TD Defendants failed to register as required under the Act.

As previously stated, The Traders Domain wasn’t MLM but did incentivized recruitment through direct referral commissions.

Not only did the TD Defendants directly solicit customers, the vast majority of whom lived in the U.S., but they also engaged other individuals and entities (“sponsors”) to solicit U.S. customers on TD’s behalf-with each sponsor acting like a spoke extending from the TD hub.

This is where well-known MLM figures, who definitely should have known better, enter the picture.

In addition to the many sponsors spread all over the United States and internationally, the TD Defendants recruited the “Sponsor Defendants” ( collectively with the TD Defendants and Trubluefx, “Defendants”), four distinct groups named in this complaint which drove the largest number of customers and funds to the TD Pool:

(i) Algo Capital LLC (“Algo Capital”) and Algo FX Capital Advisor, LLC (“Algo FX”), now known as Quant5 Advisor, LLC, by and through their officers, employees, and agents ( collectively, “Algo”), Robert Collazo, Jr. (“Collazo”), Juan Herman (“Herman”), John Fortini (“Fortini”), and Stephen Likos (Likos) (collectively, the “Algo Defendants”);

(ii) Michael Shannon Sims (“Sims”);

(iii) Holton Buggs (“Buggs”); and

(iv) Centurion Capital Group, Inc., by and through its officers, employees, and agents (“Centurion”), Alejandro Santiestaban a/k/a Alex Santi (“Santi”), Gabriel Beltran (“Beltran”), and Archie Rice (“Rice”) (collectively, the “Centurion Defendants”).

Mike Sims and Holton Buggs are of interest here. The other individuals and companies I’m not familiar with.

Mike Sims, a central figure in the related OmegaPro MLM crypto Ponzi, is believed to have stolen $84 million through The Traders Domain.

Holton Buggs is an MLM veteran dating back to Organo Gold. Circa 2018 Buggs began transitioning to MLM crypto fraud.

This culminated in Buggs launching the Meta Bounty Hunters series of Ponzi schemes. Buggs is believed to have stolen $125 million through The Traders Domain.

Alongside his MLM crypto fraud scamming, Buggs owns and operates iBuumerang. Buggs cannibalized iBuumerang and fed distributors into his fraudulent crypto dealings.

The CFTC groups Sims and Buggs as “Sponsor Defendants”.

Although the Sponsor Defendants each intended the funds they solicited from customers to be traded in the TD Pool, at least some Sponsor Defendants purported to be soliciting for their own pools or “hedge funds.”

The Sponsor Defendants solicited funds for the TD Pool even though each knew or should have known that TD was not trading the funds as represented.

Each of the Sponsor Defendants became aware ofred flags that put them on notice that TD was not a legitimate trading operation.

The Sponsor Defendants faced a choice: cease promoting TD in light of the alarming information they knew or follow the strong financial motivations they had to ignore the red flags and continue to collect generous commissions on the purported trading.

Each of the Sponsor Defendants chose the latter. The Sponsor Defendants actively downplayed the red flags and continued to solicit customers, helping to create the false impression that customers were participating in legitimate trading even as the scheme was on the brink of collapse.

Each of Sponsor Defendants knowingly made oral and written fraudulent and material misrepresentations and omissions on social media, via text messages, by telephone, and in person to potential and existing customers that they knew or should have known were false.

The Sponsor Defendants misappropriated customer funds, including by accepting funds intended for trading into bank accounts they controlled and/or collecting commissions on customer profits despite that the Sponsor Defendants knew or should have known that TD was not trading the funds as purported.

Some of the Sponsor Defendants also commingled customer funds and most were not registered as required under the Act.

Safranko … established relationships with other sponsors, including Sims and Buggs. Safranko communicated with Sims and Buggs via telephone and/or messaging applications.

Additionally, on a number of occasions, Safranko participated in telephone and video conferences with potential or existing customers that Buggs was soliciting.

On at least one occasion, Safranko traveled with Buggs to Dubai in connection with TD.

Like the other Sponsor Defendants, the TD Defendants paid Buggs and Sims commissions based on the customers that they recruited for the TD Pool.

Specific to Mike Sims;

Beginning in at least September 2021 through present (the “Relevant Sims Period”), Michael Sims fraudulently solicited customers to deposit money for the purpose of participating in pooled trading of leveraged or margined XAU/USD by his “hedge fund” by making material misrepresentations and omissions to prospective and actual customers.

In fact, Sims was using customer funds to participate in the TD Pool despite the fact that Sims knew or should have known TD was not trading customer funds as it purported.

In addition, Sims misappropriated customer funds and failed to register as required under the Act.

Pursuant to this scheme, at least 42 Sims customers deposited no less than $22 million for the purposes of trading leveraged or margined XAU/USD.

After working with other sponsors to solicit customer for TD, beginning in at least September 2021, Sims began soliciting customers for his own “hedge fund,” through telephone calls, text messages, messaging apps, and in-person meetings.

Sims made numerous fraudulent misrepresentations and omissions about:

(i) the ownership and operation of the trading business,

(ii) the profit and risk associated with the purported trading, and

(iii) ability and timeliness of customer withdrawal requests.

From the outset, Sims told prospective customers that he was soliciting funds for his hedge fund.

Sims claimed his hedge fund had been in operation for more than 10 years and employed a team of experienced traders to trade leveraged or margined XAU/USD on behalf of its customers.

These statements were false.

Sims was not soliciting funds on behalf of a hedge fund. Sims did not own any “hedge fund” let alone one that had been in operation for more than 10 years and employed a team of traders.

Neither Sims, personally, nor any hedge fund or other entity owned by him traded any funds on behalf of customers.

Rather, as Sims later admitted to a customer, he was a sponsor that recruited customers for the TD Pool.

Finally, in addition to misrepresenting the identity and location of the trading operation, Sims also omitted to tell at least one prospective customer that he would be charging commissions, and sizeable ones at that.

Only after this customer received his first account statement did he notice a sizeable withdrawal from his account.

When the customer questioned Sims about the withdrawals, Sims informed him that there would be “daily and monthly commissions” which would range from 40-50%.

Sims did not explain who would be receiving these commissions, nor what percentage Sims himself would take.

Sims also made misrepresentations to prospective and current customers about the timeframe and ability to withdraw their funds allowing the scheme to proceed for months after it initially began to unravel.

When customers asked Sims about the status of these withdrawal requests, Sims repeatedly made excuses for delays and provided false statements about the timing of the withdrawals.

Sims also attempted to dissuade customers from taking withdrawals from their accounts.

Later, Sims stopped responding to the customers communications seeking information about the pending withdrawal.

In addition to the other indications of fraudulent TD activity about which Sims knew or should have known, Sims demonstrated his knowledge that TD was engaged in potentially illegal and problematic activities by directing potential customers to disguise their funding payments.

Despite the fact that Sims knew or should have known that TD was not trading customer funds as purported, Sims directed millions of dollars in customer funds to the TD Pool, and misappropriated customer funds by taking sizable commissions. Sims’ commission ranged from 40-50% of the purported trading profit.

Specific to Holton Buggs;

Beginning in at least February 2021 continuing through present (the “Relevant Buggs Period”), Buggs fraudulently solicited customers to deposit money for the purpose of participating in the TD Pool by making material misrepresentations and omission to actual and prospective customers.

Buggs solicited customers for the TD Pool despite the fact that Buggs knew or should have known TD was not trading customer funds as it purported

In addition, Buggs misappropriated customer funds and failed to register as required under the Act.

Pursuant to this scheme, at least 517 Buggs customers deposited no less than $54 million for the purpose of trading leveraged or margined XAU/USD.

Around February 2021 , Buggs purchased a trading education company, and despite not being a licensed trader, began expanding the company beyond training and education.

Buggs built upon his already large network of MLM businesses and industry acquaintances to begin soliciting customers for the TD Pool.

Several months after the purchase of his trading company, Buggs began operating as a “sponsor” to solicit customers for the purpose of trading XAU/USD and then directed their funds to the TD Pool.

Using his existing MLM businesses and the associates affiliated with them, Buggs held out the opportunity to participate in his “private trading hedge fund” through his “private broker” as a reward for hitting certain sales tiers in his other MLM businesses.

Once associates hit the “emerald” level they were given the opportunity to participate in the trading via Buggs’ “private broker,” creating an aura of exclusivity.

Buggs concealed the identity of TD until associates reached the higher “diamond” level and executed a non-disclosure agreement.

Buggs also solicited prospective customers beyond his pre-existing MLM network through in-person events. For example, in early 2022, Buggs invited approximately fifteen prospective customers to a dinner meeting in San Diego, California.

Similarly, in 2022 Buggs attended a conference in Miami, Florida, during which he solicited at least two customers for the commodity pool.

During the Relevant Buggs Period, Buggs fraudulently solicited customers through, telephone, messaging apps, and in-person events such as conferences and dinners- to deposit money for the purposes of trading leveraged and margined XAU/USD despite the fact that he knew or should have known that TD was not trading the funds as purported.

Using his MLM businesses and network of industry connections, Buggs touted the incredible returns that the commodity pool generated through leveraged or margined trading ofXAU/USD.

He told prospective customers that the commodity pool had an “incredible winning streak” and claimed that it “never had a losing month”.

Buggs boasted to a business associate by text that “I HA VE A MONEY PRINTING MACHINE.”

In some instances, Buggs used the Trading App to show prospective customers the purported XAU/USD trading history and accounts that he controlled with “balances” of approximately $80 million and $650 million.

These assertions about incredible gains were on their face, unrealistic and unattainable.

Buggs knew or should have known that these purported trading returns were false.

In 2021 , at least one prospective customer told Buggs that he had conducted a background check on Safranko and was concerned about the negative information and reviews he had seen online.

When assuring this prospective customer about the TD and Safranko warnings that he raised, Buggs made additional fraudulent statements.

Buggs reassured this customer that he traded “right beside [Safranko]”; that Buggs was “in control of [his customers’] funds. ”

These statements were false and misleading. In fact, Buggs did not trade his own customers’ funds, nor was he in control over the funds purportedly sent to TD.

And, despite knowing about the various warnings about and negative reviews of TD and Safranko, Buggs continued to solicit new customers for the TD Pool and failed to tell current customers about those warnings and negative reviews.

Buggs continued to make false assurances about the ability of customers to withdraw funds even after customers began to experience significant withdrawal difficulties and delays in the Fall of 2022.

In February 2023, when one customer contacted Buggs to inquire about the delay in obtaining his withdrawal, Buggs falsely assured him that “withdrawals have steadily gone out” from TD.

Buggs knew or should have known that this statement was false: Withdrawals had not steadily gone out since August 2022.

In an effort to insulate himself from claims that he was complicit in a fraudulent scheme, Buggs also claimed to a complaining customer that he also “had not withdrawn my trading profits as they sit in TD.”

Buggs knew that this statement was false : While regular customers withdrawals had been stalled for months, Buggs, and his family, had taken at least a million dollars in purported trading profits from TD accounts during this time period.

Buggs knew or should have known that TD was engaged in illegal and fraudulent conduct because, as an agent of TD, Buggs was directing potential and current customers to disguise the purpose of their funding payments and countries of origin.

Buggs, himself and through his assistant, instructed potential and current customers to conceal the purpose of these deposits by directing that they use certain opaque language in the wire transfer memorandum.

For example, he instructed one customer that the deposit should say “services (ONLY!)” and if the wire “reference include[ d] anything else, the wire will be returned & the related account closed. No exceptions!”

Other customers were similarly instructed that in order to participate in the pool through Buggs, that they must wire funds with the memo line for “Services.”

Buggs also instructed TD customers to take deceptive steps when funding their TD account through cryptocurrency. When customers opted to fund TD accounts with cryptocurrency, they were asked their country ofresidence in the TD account set-up instructions.

Buggs and/or his assistant instructed US customers that they should choose “crypto” of their country of origin, rather than the USA.

Instead of heeding or investigating the numerous red flags signaling that TD was a fraud and not engaged in legitimate trading, Buggs downplayed the warnings and continued to solicit customers for the TD Pool, collecting millions of dollars in commissions on purported trading profits.

Buggs misappropriated some TD customer funds by accepting TD a portion of customer funds into bank accounts he controlled and using those funds for personal use.

For example, although he started with a bank account balance of approximately $45,000, between April 11-13th, Buggs accepted four wires from TD customers each including memo lines incorporating the word “Services,” totaling $370,000.

Buggs did not wire or otherwise transfer these funds to any known brokerage or trading entity. Buggs also took in an additional $110,000 from another source into the account.

On April 14, 2022, Buggs used all or some of the $370,000 to wire $465,000 to a third party with a memo “Balance for Lambo.”

In another example, at the end of April 18, 2022, Buggs had a balance of approximately $70,000 in his bank account.

Buggs accepted wires, each of which with memo lines including the description “Services,” from three customers totaling $545,000 into this account.

Buggs failed to transfer the funds to any known brokerage or trading entity. Two days after the customers wired the funds to Buggs’ account, Buggs wired $350,000 for the purchase of a condo.

Buggs also misappropriated TD customer funds by taking sizable commissions on purported trading profits when he knew or should have known that profits reflected in the TD Pool account were false.

The Traders Domain collapsed in late 2022, generating millions in consumer losses.

In the fall of 2022, the scheme began to unravel, and customers began to experience extreme withdrawal delays and/or were unable to withdraw their funds.

To persuade customers that the withdrawal issues were not an indication of fraud, the TD Defendants provided numerous, conflicting excuses for the delays-including, in June 2023, announcing that TD had been acquired by Trubluefx.

The TD Defendants falsely assured customers that their funds were safe and withdrawals would be processed. Notwithstanding the significant withdrawal delays, the Sponsor Defendants ignored or downplayed the withdrawal issues and continued to solicit funds from new and existing customers to be traded in the TD Pool.

These misstatements allowed Defendants to continue their fraudulent scheme for more than six months and bilk customers out of millions of additional dollars.

At least some of Defendants’ conduct is ongoing-upon information and belief, the majority of customer funds have not been returned.

Unless restrained and enjoined by this Court, Defendants will likely continue to engage in acts and practices alleged in this Complaint and similar acts and practices.

The CFTC cites “no less than $283 million” in The Traders Domain losses across “at least 2046 customers”. Based on leaked investor data, The Traders Domain is estimated to have taken in around $3.3 billion.

During the Relevant Period, TD directly and … through the Sponsor Defendants, caused no less than $180 million in customer funds to be deposited into bank accounts held in the name of various third-party entities that TD controlled through a TD agent who was the signatory on these accounts.

None of these third party entities were firms that engaged in trading. None of the funds deposited in these third party bank accounts were ever sent to TD or any other firm that engaged in trading.

Instead, TD directed its agent to use customer funds deposited into the third-party bank accounts to make payments unrelated to trading and to make Ponzi-style payments to other customers.

In its filed lawsuit the CFTC alleges fraud across multiple violations of the Commodity Exchange Act.

The CFTC is seeking an injunction against The Traders Domain defendants, prohibiting further violations of the Commodities Exchange Act.

If granted, the injunction will also bar The Traders Domain defendants from having anything to do with commodities trading in the US.

Additionally, disgorgement of ill-gotten gains, full restitution of investor losses, pre-judgment and post-judgment interest and a civil monetary penalty are also sought.

As previously noted, the CFTC’s The Traders Domain Complaint was filed under seal on September 30th.

The CFTC requested the Complaint be kept under seal so as to

allow the Commission to

(1) obtain a Statutory Restraining Order freezing Defendants’ assets, prohibiting destruction of records, and authorizing the Commission’s immediate inspection of uch records and

(2) serve relevant financial institutions with the Court’s Statutory Restraining Order to effectuate the asset freeze, without notice ot the Defendants.

The court granted the CFTC’s seal motion on October 1st.

On October 3rd, the court granted the CFTC’s request for an ex-parte statutory restraining order against The Traders Domain defendants (freezing of assets etc.). A Temporary Receiver was also appointed.

There is also good cause for the appointment of a Temporary Receiver to take control of all assets owned, controlled, managed or held by Defendants, or in which they have any beneficial interest (“Defendants’ Assets”), so that the Temporary Receiver may preserve assets, investigate and determine customer claims, determine unlawful proceeds retained by Defendants and amounts due to customers as a results of Defendants’ alleged violations, and distribute remaining funds under the Court’s supervision.

On October 11th, the CFTC filed a motion with the court requesting the case be unsealed. The court unsealed the case later the same day.

While it’s far too early to get into specifics, it’s assumed clawback litigation will be filed against The Traders Domain’s top net-winners at some point.

Many of The Traders Domain’s top net-winners are MLM company owners or top company distributors/affiliates.

It should be noted that the CFTC previously filed a lawsuit targeting Tin Quoc Tran’s SAEG Ponzi scheme. Ted Safranko and Mike Sims are named defendants in the suit.

Safranko, who is believed to have gone on the run since the CFTC’s SAEG lawsuit was filed in February 2023, copped a $3.8 million default judgment in September 2023.

Mike Sims settled the CFTC’s alleged SAEG Ponzi fraud charges for $250,000 last month.

Finally, the biggest MLM Ponzi I’m aware of that fed into The Traders Domain was OmegaPro (estimated $4 billion in consumer losses).

Mike Sims and Eric Worre were directly tied to OmegaPro. Sims as a co-founder and Worre as OmegaPro’s Official Strategic Coach.