United States District Court, D. New Jersey
U.S. COMMODITY FUTURES TRADING COMMISSION, Plaintiff,
ALCTBIADES CIFUENTES, JENNIFER WEE CIFUENTES, and CIFUENTES FUND MANAGEMENT, LLC, Defendants.
ORDER GRANTING PLAINTIFF'S MOTION FOR DEFAULT
JUDGMENT, PERMANENT EXJUNCTION, CIVIL MONETARY PENALTY, AND
Esther Salas United States District Judge.
the Court is Plaintiff U.S. Commodity Futures Trading
Commission's ("Plaintiff, " "CFTC, "
or "Commission") Motion for Entry of Default
Judgment, Permanent Injunction, Civil Monetary Penalty, and
Equitable Relief against Defendants Alcibiades Cifuentes
("Cifuentes"), Jennifer Wee Cifuentes
("Wee"), and Cifuentes Fund Management, LLC
("CFM"), (collectively, "Defendants"),
pursuant to Federal Rule of Civil Procedure 55(b)(2) and New
Jersey Court Rule 4:43-2. For the reasons stated below and
good cause having been shown, the motion is
September 30, 2016, the CFTC filed a Complaint for Injunctive
and Other Equitable Relief and for Civil Monetary Penalties
Under the Commodity Exchange Act and Commission Regulations
(“Complaint”) against Defendants for violations
of the Commodity Exchange Act (the “Act”), 7
U.S.C. §§ 1-26 (2012), and its implementing
regulations (“Regulations”), 17 C.F.R.
§§ 1.1-190.10 (2015). (ECF No. 1).
Complaint alleges that, from at least April 2013 through
March 2015 (the “Relevant Period”), Cifuentes and
Wee, through CFM, engaged in a fraudulent scheme to solicit
funds for a pooled investment vehicle trading in off-exchange
leveraged or margined foreign currency (“forex”)
contracts. Rather than use customers' funds to trade
forex contracts as promised, Defendants misappropriated the
money entrusted to them for the benefit of Cifuentes and Wee.
October 13, 2016, Plaintiff, pursuant to Federal Rule of
Civil Procedure 4(e)(1) and 4(h)(1)(B), caused a copy of the
Summons and Complaint to be served on CFM's registered
agent in Wilmington, Delaware. (Ex. C to Decl. of Daniel J.
Grimm (“Grimm Decl.”), ECF No. 3-2).
addition to serving CFM, Plaintiff undertook significant
efforts to serve the Cifuentes and Wee with the Summons and
Complaint, including dispatching process servers on numerous
occasions to addresses associated with Cifuentes and Wee,
sending the Summons and Complaint via Certified Mail to
multiple addresses associated with Cifuentes and Wee,
contacting current and former counsel in a related criminal
proceeding against Cifuentes and Wee, and publishing notices
of this action in the print and online versions of The
Star-Ledger. (Grimm Decl. at ¶¶ 4-10).
December 29, 2016, based upon Plaintiff's efforts to
serve Cifuentes and Wee and the actual service of process
upon Defendants as described in paragraphs 3-4 above,
Plaintiff moved for entry of default against Defendants (the
“Default Motion”), (ECF No. 3).
December 31, 2016, Plaintiff's process server personally
served Wee with the Summons and Complaint. (ECF No. 4-1, Ex.
January 24, 2017, Plaintiff's process server personally
served Cifuentes with the Summons and Complaint. (ECF No. 5).
February 10, 2017, the Court issued an order granting the
Default Motion as to CFM because CFM failed to respond to the
Complaint within the time permitted by Federal Rule of Civil
Procedure 12(a) and (b). (Order Granting in Part Pls. Mot.
for Entry of Default Against All Defs. (the “February
10 Order”), ECF No. 6).
February 10 Order also concluded that Plaintiff's
alternative service of the Summons and Complaint on Cifuentes
and Wee (described in paragraph 4 above) was sufficient
pursuant to Federal Rule of Civil Procedure 4(e)(1) and New
Jersey Court Rule 4:4-3(a), and resulted in Cifuentes being
served with the Summons and Complaint by, at the latest,
December 8, 2016. (ECF No. 6 at 2). The Court accordingly
placed Cifuentes in default for failing to respond to the
Complaint within the time allowed by Federal Rule of Civil
Procedure 12(a) and (b). (Id. at 3).
While the February 10 Order determined that Wee had also been
adequately served with the Summons and Complaint, the Court
denied without prejudice entry of default as to her because
Plaintiff voluntarily withdrew the Default Motion as to Wee
on January 6, 2017. (See ECF No. 4).
February 21, 2017, Plaintiff renewed the Default Motion as to
Wee, on grounds that Wee was personally served with the
Summons and Complaint on December 31, 2016, and failed to
respond within the time permitted by Federal Rule of Civil
Procedure 12(a) and (b). (ECF No. 7-1).
March 17, 2017, the Court granted the Default Motion as to
Wee, placing her in default and granting Plaintiff leave to
move for a default judgment as to her. (ECF No. 8).
Plaintiff's instant motion followed.
FINDINGS OF FACT
Plaintiff CFTC is an independent federal regulatory agency
charged by Congress with the administration and enforcement
of the Act and Regulations. The CFTC maintains its principal
office at 1155 21st Street N.W., Washington, D.C. 20581.
Defendant Cifuentes is the spouse of Wee and, along with Wee,
is one of two founders and principals of CFM. During the
Relevant Period Cifuentes was the Chief Executive Officer,
Member, and Managing Principal of CFM. Along with Wee,
Cifuentes is a signatory on the bank accounts and forex
trading accounts used by and on behalf of CFM. Cifuentes
resides in West New York, New Jersey. Cifuentes has never
been registered in any capacity with the Commission.
Defendant Wee is the spouse of Cifuentes and, along with
Cifuentes, is one of two founders and principals of CFM.
During the Relevant Period Wee was the Head of Trading and
Risk Management and the Managing Principal of CFM. Along with
Cifuentes, Wee is a signatory on the bank accounts and forex
trading accounts used by and on behalf of CFM. Wee resides in
West New York, New Jersey. Wee has never been registered in
any capacity with the Commission.
Defendant Cifuentes Fund Management, LLC is a Delaware
limited liability company organized on June 11, 2013. CFM
lists its principal place of business as New York, New York.
CFM is the alter ego of Cifuentes and Wee. During the
Relevant Period Cifuentes and Wee were the sole managers of
CFM, Cifuentes and Wee were the only principals and employees
of CFM, Cifuentes and Wee comingled their personal funds with
the funds of CFM, and CFM held itself out as the
“DBA” (doing business as) entity of Cifuentes and
Wee. CFM has never been registered in any capacity with the
The Fraudulent Scheme
During the Relevant Period Cifuentes and Wee, individually
and on behalf of CFM, devised a sham forex pool in order to
finance their lavish lifestyles with approximately $590, 000
they misappropriated from over 24 members of the public
(“pool participants”). To execute their scheme,
Cifuentes and Wee knowingly made material misrepresentations
and omissions about their forex trading abilities, strategy,
and returns to persuade pool participants to transfer funds
to Defendants. To prevent their fraud from being uncovered,
Cifuentes and Wee fabricated documents, made false
statements, and diverted a portion of pool participants'
deposits to other victims as “dividends” in the
manner of a “Ponzi” scheme.
or around April 2013, to advance their fraudulent scheme,
Cifuentes and Wee established a practice, or demonstration,
forex trading account with GFT Global Markets UK Ltd. (the
“Demo Account”). Fictitious “trades”
placed in the Demo Account were for demonstration purposes
only, posed no risk of loss, and did not involve the actual
purchase or sale of forex contracts.
Between at least May and June 2014, Cifuentes and Wee lured
pool participants to deposit funds with Defendants by
selecting fictitious, profitable forex trades from the Demo
Account and falsely representing these risk-free trades to be
Defendants' actual forex trades. Cifuentes and Wee did
not disclose to pool participants that the posted trades were
fictitious, or that the Demo Account actually suffered net
“losses” exceeding $5 million during the Relevant
or about May 1, 2013, Cifuentes and Wee registered the
internet domain name www.cifuentesfund.com, which they used
to host a public website that they at all times managed and
controlled (the “CFM Website”). Cifuentes and Wee
used the CFM Website to make numerous fraudulent statements
to pool participants, including that deposits into the CFM
pool were traded by “reputable and financially strong
Futures & Commodities Merchants who are registered and
regulated internationally, ” that Defendants used
“algorithmic trading” strategies to trade pool
funds, that customers' deposits were “FDIC Insured,
” and that CFM “FX Certificate[s] of
Deposit” yielded “guaranteed” profits of
60% or 120% upon expiration. Cifuentes and Wee knowingly made
these false and fraudulent statements for the purpose of
inducing pool participants to transfer funds to Defendants.
the direction of Cifuentes and Wee, pool participants entered
into Subscription Agreements with “Alcibiades Cifuentes
and/or [sic] Jennifer Wee Cifuentes DBA Cifuentes Fund
Management, LLC.” The Subscription Agreements provided
that Defendants would transfer “securities”
reflecting a “limited partnership interest” to a
pool participant in exchange for the pool participant's
transfer of funds to Defendants. The Subscription Agreements
provided that each pool participant would receive, on a
quarterly basis, monthly dividends “guaranteed to be no
less than” 10 percent of the pool participant's
the direction of Cifuentes and Wee, pool participants
transferred funds via wire and check payments to bank
accounts controlled by Defendants. Once funds were deposited
into Defendants' bank accounts, Cifuentes and Wee
misappropriated all or most of pool participants' funds -
sometimes by transfers the very day they cleared
Defendants' bank accounts - to finance Cifuentes's
and Wee's lifestyles. Among other fraudulent
expenditures, Cifuentes and Wee spent pool participants'
funds on luxury vehicles, jewelry, and clothing.
Throughout the Relevant Period, Cifuentes and Wee falsely and
fraudulently represented to pool participants that their
funds were used to trade or invest in forex contracts and
that money deposited with Defendants was safe, insured, and
subject to rigorous risk-management procedures. At no point
did Cifuentes or Wee disclose to pool participants that they
were misappropriating pool participants' funds.
Cifuentes and Wee fabricated account statements that falsely
represented to pool participants that their funds were
generating significant returns. The fabricated account
statements did not disclose that Cifuentes and Wee had stolen
all of pool participants' funds.
prevent their fraud from being uncovered, Cifuentes and Wee
diverted pool participants' deposits to other victims as
“dividends” in the manner of a
Cifuentes and Wee also made false statements to pool
participants via face-to-face meetings, e-mail, and
telephone, including by blaming delayed
“dividend” payments on fictitious international
“bankers” and financial institutions.
total, Defendants fraudulently solicited approximately $590,
000 from at least 24 pool participants. Defendants passed
$132, 880 of the funds they stole from some pool participants
to other pool participants through “Ponzi”-like
payments, and misappropriated the remaining $457, 120 for
themselves. (Decl. of Patricia Gomersall (“Gomersall
Decl.”), ECF No. 10-4 ¶¶ 27, 36 & Ex. I).
CONCLUSIONS OF LAW
Default Judgment Is Warranted Against Cifuentes, Wee, and
Federal Rule of Civil Procedure 55(b) and New Jersey Court
Rule 4:43-2 authorizes litigants to seek, and the Court to
enter, default judgment against a party who has failed to
plead or otherwise defend an action. Fed.R.Civ.P. 55(b); N.J.
Ct. R. 4:43-2.
Three factors determine whether default judgment may be
entered: whether (1) defendants have been served with the
summons and complaint and the court possesses jurisdiction;
(2) the unchallenged facts of the complaint adequately allege
a cause of action; and (3) entry of default judgment is
proper, based upon certain issues within the Court's
discretion. See Dellecese v. Assigned Credit Solutions,
Inc., 2017 WL 957848, at *2 (D.N.J. Mar. 10, 2017)