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Feds Say All That Glittered At Gold Coast Futures & Forex Was Not Gold

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On March 7, 2012, the Commodity Futures Trading omission filed a civil enforcement Complaint against Christopher Varlesi, 53, Chicago, IL, which resulted in the entry of an emergency ex parte restraining Order on March 8, 2012, freezing Varlesi’s assets and prohibiting him from destroying or altering books and records.

On June 5, 2012, Varlesi was indicted on six counts of mail and wire fraud in the Northern District of Illinois.  Varlesi is described in the Indictment as  the sole proprietor of Gold Coast Futures & Forex, which purported to buy and sell securities and commodities and operate a pool of investor money for trading purposes – however, the company was not  registered or licensed to engage in such conduct.

The Indictment alleges that  between July 2008 and January 2012, Varlesi falsely represented to clients:

  • his intended use of their money to trade gold, commodity futures, and foreign currency,
  • the expected return on their investments, and
  • the safety of their investments.

Allegedly, Varlesi  created and distributed false account statements and made Ponzi-type payments to investors. In furtherance of his scheme, Varlesi allegedly told clients that their investments were guaranteed to be profitable, with no risk of losing principal. Moreover, he is charged with providing promissory notes to certain investors, falsely promising to return the entire principal amount of their investment, as well as guaranteed monthly interest ranging between 5% to 7.5%.

The Indictment asserts that Varlesi  fraudulently obtained about $1.4 million and caused some 15 individual investors to lose about $600,000. He is charged with misappropriating  a substantial portion of investor funds for his own benefit, including misusing $99,750 in May 2010 to pay for a year’s rent for an apartment in the Trump International Hotel and Tower in Chicago and to make Ponzi-type payments to other investors.

NOTE: An indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. 

Verlesi faces on each count of wire and mail fraud, a maximum penalty of 20 years in prison, a $250,000 fine, and mandatory restitution. The court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. Also sought is a forfeiture of approximately $600,000.