The Commodity Futures Trading Commission announced Monday that a federal court ordered over $2 million in restitution for victims of a precious metals and foreign currency investment scheme that specifically targeted retirement-planning investors.
The U.S. District Court for the District of Oregon entered a consent order against Robert L. Adams and SimTradePro Incorporated, both of Oregon, requiring them to pay $2,072,986 in restitution to defrauded victims. The court also permanently banned both defendants from trading and registering with the CFTC and prohibited further violations of the Commodity Exchange Act and CFTC regulations.
The consent order resolves a CFTC enforcement action filed Sept. 30, 2024. According to the court's findings, Adams and SimTradePro fraudulently solicited and accepted more than $2.3 million from at least 100 customers through their commodity pools, which traded leveraged foreign currency exchange and leveraged gold and silver contracts.
The scheme particularly targeted investors who were planning for retirement, exploiting their trust and financial vulnerability. The defendants employed multiple deceptive practices to lure victims into their fraudulent investment pools.
Key to the fraud was the defendants' misrepresentation of fee structures. Adams and SimTradePro falsely claimed they would only be paid if their customers made money, creating an impression that the firm's interests were aligned with those of investors. This performance-based fee claim was entirely false, according to court findings.
The defendants also concealed trading losses from investors, preventing them from understanding the true performance of their investments. This practice allowed Adams and SimTradePro to continue soliciting new investments while existing customers remained unaware of mounting losses in their accounts.
The court found that SimTradePro operated unlawfully as both a commodity pool operator and commodity trading advisor without proper registration. These roles require CFTC registration and compliance with specific regulatory requirements designed to protect investors.
The case demonstrates how fraudsters often target precious metals and foreign currency markets, which can appear attractive to retirement investors seeking portfolio diversification. The leverage aspect of the contracts offered by Adams and SimTradePro would have amplified both potential gains and losses, though the defendants failed to properly disclose these risks.
In a related criminal proceeding involving the same misconduct, Adams received a 2.5-year prison sentence on Aug. 12 and was ordered to pay restitution in *United States v. Adams* (No. 6:23-cr-00211-MC D. Or.). The parallel criminal prosecution underscores the serious nature of the fraud and provides additional consequences beyond the civil enforcement action.
The CFTC cautioned that restitution orders do not guarantee victims will recover their losses. "Orders requiring repayment of funds to victims may not always result in the recovery of any money because the wrongdoers may not have sufficient funds or assets," the agency stated. This reality highlights the importance of prevention and early detection of investment fraud.
The case involved significant international cooperation, with the CFTC thanking the United Kingdom Financial Conduct Authority for its assistance. The agency also acknowledged support from the Oregon Division of Financial Regulation, the Australian Securities and Investments Commission, and the Central Bank of Ireland, indicating the cross-border nature of the investigation.
This enforcement action reflects the CFTC's continued focus on protecting retail investors, particularly those planning for retirement who may be more susceptible to investment fraud promising steady returns or portfolio diversification. The agency's Division of Enforcement emphasized its commitment to holding wrongdoers accountable and protecting customers.
The case serves as a warning to investors about common red flags in investment fraud, including promises of payment only upon customer profits, guaranteed returns, and pressure to invest quickly. Potential investors should verify registration status of firms and individuals through CFTC databases and be wary of unsolicited investment opportunities.
For retirement investors specifically, the case highlights the importance of working with properly registered investment advisors and understanding the risks associated with leveraged commodity trading. While precious metals and foreign currency can be legitimate portfolio components, leveraged trading in these markets carries substantial risks that require careful consideration.
The CFTC's successful prosecution and restitution order demonstrate the agency's enforcement capabilities, though the case also illustrates how investment fraud can cause significant financial harm before detection. The 100-plus victims affected by this scheme represent individual retirement plans that were derailed by fraudulent promises and concealed losses.