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Federal Court Orders Affiliate Marketer to Pay More Than $13.8 Million for Binary Options Fraud

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10/13/2020 | 11:55am EDT
Release Number 8285-20 Federal Court Orders Affiliate Marketer to Pay More Than $13.8 Million for Binary Options Fraud

October 13, 2020

Washington, D.C.- The Commodity Futures Trading Commission announced today that the U.S. District Court for the District of Hawaii entered an order of default judgment on September 14, 2020 finding that Peter Szatmari, formerly of Hawaii, fraudulently solicited U.S. residents to open binary options trading accounts. Szatmari is required to pay more than $13.8 million in connection with the fraud.

The default judgment follows Judge Derrick K. Watson's entry of an order on August 13, 2020 adopting the findings and recommendations Magistrate Judge Kenneth J. Mansfield issued on July 28, 2020. Szatmari is required to pay approximately $6.25 million in restitution to defrauded customers, $1.9 million in disgorgement, and a civil monetary penalty of $5.7 million. Additionally, Szatmari is permanently enjoined from engaging in conduct that violates the Commodity Exchange Act, registering with the CFTC, and trading in any CFTC-regulated markets.

The order resolves a CFTC enforcement case filed on October 7, 2019, which charged that Szatmari and a business partner created and disseminated fraudulent solicitations that led approximately 25,000 customers to open and fund trading accounts that generated $3.8 million in fees for Szatmari and his partner, while customers lost most or all of their funds. [See CFTC Press Release No. 8047-19]

Case Background

According to the CFTC complaint and findings, Szatmari specialized in 'affiliate marketing,' a form of performance-based marketing that promotes third-party products or services, such as binary options trading, and is typically conducted via solicitations that the affiliate marketer emails to recipients and/or posts on the internet. As charged and found, Szatmari and his partner fraudulently solicited customers into opening and funding binary option accounts on websites operated by unregistered, off-exchange brokers while pitching free access to automated trading software that purported to generate significant profits with little to no risk of loss. Their marketing campaigns featured actors pretending to be actual owners or users of the trading software, and depicted fictitious trading results as real. The court further found that Szatmari knew that the solicitations were false and misleading, that the software did not work as claimed, and that customers were unlikely to make a profit.

The CFTC cautions that orders requiring repayment of funds to victims may not always result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

The CFTC acknowledges and thanks the Securities and Exchange Commission (SEC) for its assistance in this matter.

The Division of Enforcement staff members responsible for this case are: Allison V. Passman, Joseph Patrick, and Scott R. Williamson, as well as former staff members Camille M. Arnold, Stephanie Reinhart, and Susan J. Gradman.

* * * * * *

Joint CFTC-SEC Binary Options Investor Alert

The CFTC's Office of Customer Education and Outreach and the SEC's Office of Investor Education and Advocacy have issued a joint investor alert to warn about fraudulent schemes involving binary options and their trading platforms. The alert warns customers that the perpetrators of these unlawful schemes may refuse to credit customer accounts, deny fund reimbursement, commit identity theft, and manipulate software to generate losing trades.

Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), or file a tip or complaint online.

-CFTC-

Disclaimer

CFTC - U.S. Commodity Futures Trading Commission published this content on 13 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 October 2020 15:54:07 UTC


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