The U.S. Commodity Futures Trading Commission (CFTC) today entered an Order requiring Scott A. Beatty of Roy, Utah, individually and doing business as Peak Capital Group, Inc., and his Ogden, Utah-based company, Peak Capital Management Group, Inc. (Peak Capital), jointly to pay restitution of $641,000 and a $1 million civil monetary penalty for committing fraud and misappropriation, making false statements to the CFTC, and failing to register with the CFTC in connection with operating a leveraged or margined off-exchange forex scheme. Neither Beatty nor Peak Capital has ever been registered with the CFTC.
Specifically, the Order finds that during the CFTC’s investigation, Beatty made false and misleading written statements to the CFTC on three occasions. In each instance, in response to CFTC inquiries and requests for information, Beatty lied, claiming that neither he nor his company solicited customers for any managed forex accounts or forex related products.
The Order finds that, from January 2011 through April 2014, Beatty and Peak Capital solicited and obtained approximately $825,000 from at least 49 Japanese citizens to trade forex in individual managed accounts via e-mail and their internet website. Rather than directing customers to open individual customer accounts, Beatty opened a single trading account in the name of PCMG that suffered losses, while Beatty misappropriated customer funds for his personal use, and returned some funds to customers as purported profits in excess of principal in the manner of a Ponzi scheme, according to the Order.
Specifically, of the $825,000 that Beatty accepted from customers, he lost $71,000 trading, including commissions and fees, and of the remaining $754,000, he misappropriated $641,000, using most of the funds to make fabricated payments of profits to customers and to pay personal expenses, including car payments, retail purchases, and travel, the Order finds.
To lure customers, Beatty claimed to be an experienced and accomplished forex trading advisor earning returns as high as 43.9 percent. However, the Order finds that Beatty was not an accomplished forex trader and the trading results posted by him on his website were false.
In addition to ordering restitution and imposing a civil monetary penalty, the CFTC Order imposes permanent trading and registration bans on Beatty and Peak Capital and prohibits them from further violations of the Commodity Exchange Act and CFTC regulations, as charged.
The CFTC cautions victims that restitution orders may not 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.
CFTC Division of Enforcement staff members responsible for this matter are Brigitte Weyls, Ava Gould, Scott Williamson, and Rosemary Hollinger.
To read the official release from the CFTC, click here.