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Commodity Futures Trading Commission v. Lanzana

United States District Court, D. New Jersey

March 14, 2019

COMMODITY FUTURES TRADING COMMISSION, Plaintiff,
v.
THOMAS LANZANA, individually and d/b/a UNIQUE FOREX, NIKOLAY MASANKO, BLACKBOX PULSE LLC, and WHITE CLOUD MOUNTAIN LLC, Defendants.

          ORDER

          MADELINE COX ARLEO, UNITED STATES DISTRICT JUDGE.

         THIS MATTER comes before the Court by way of Plaintiff Commodity Futures Trading Commission's (“CFTC”) unopposed application for an entry of default judgment[1]pursuant to Federal Rule of Civil Procedure 55(b), ECF No. 31, against Defendants Thomas Lanzana (“Lanzana”), individually and d/b/a Unique Forex, Nikolay Masanko (“Masanko”), Blackbox Pulse, LLC (“Blackbox” or “BBP”), and White Cloud Mountain, LLC (“WCM”);

         and it appearing that the pending claims arise out of a scheme to defraud investors, through which Defendants Lanzana and Masanko used sham companies to fraudulently solicit and accept investments in retail off-exchange foreign currency (“forex”) transactions and other investments from at least thirty customers, see Compl. ¶ 1;

         and it appearing that Plaintiff CFTC is an independent federal regulatory agency that is responsible for administering and enforcing the Commodity Exchange Act (the “Act”), 7 U.S.C. ¶¶ 1-26 and its accompanying regulations (the “Regulations”), 17 C.F.R. pt. 1-190, id. ¶ 9;

         and it appearing that Defendant Lanzana formed and managed Blackbox Pulse LLC-a New Jersey Limited Liability Company through which Lanzana solicited and accepted funds from customers for the purported purpose of trading forex, see id. ¶¶ 2, 10, 12;

         and it appearing that Lanzana also did business under the name “Unique Forex, ” an apparently made-up entity that Lanzana marketed as a limited liability company, [2] id. ¶¶ 1, 10, 13;

         and it appearing that Lanzana opened a checking account with BB&T under the name “Thomas L. Lanzana DBA Unique Forex, ” id.;

         and it appearing that using these two corporate aliases-Blackbox Pulse LLC and Unique Forex-Lanzana fraudulently solicited and accepted at least $450, 000 from at least fifteen customers for the purported purpose of trading forex, id. ¶ 2, 10, 12-13;

         and it appearing that neither Blackbox nor Unique Forex ever registered with the CFTC or maintained trading accounts, id. ¶¶ 12-13;

         and it appearing that Lanzana commingled his personal assets with customer funds in the “corporate” accounts for Blackbox and Unique Forex, and that he used those “corporate” accounts to fund his own personal expenses, id. ¶¶ 25, 38;

         and it appearing that Defendant Masanko formed and managed White Cloud Mountain, LLC, through which he solicited and accepted funds for the purported purpose of trading forex, id. ¶¶ 11, 14;

         and it appearing that WCM maintained no trading accounts in its name and has never been registered with the CFTC, id. ¶ 14;

         and it appearing that Masanko commingled his personal assets with customer funds in the WCM checking account, and that Masanko used WCM's “corporate” account to fund his own personal expenses, id. ¶ 49;

         and it appearing that Lanzana and Masanko maintained their customers' trust by providing fabricated account statements, see id. ¶¶ 26-27, 30, 40-41, 51, by disseminating links to YouTube videos in which they described trades and discussed profits, see id. ¶¶ 29, 40, 52, and by sending falsified annual tax documents to customers, see id. ¶¶ 33, 42, 53;

         and it appearing that Lanzana transferred less than $69, 000 of the money collected from customers into trading accounts, but none of these accounts were registered to the purported trading companies, id. ¶ 63;

         and it appearing that Lanzana misappropriated approximately $350, 000 of the customer funds to pay other customers who requested return of their funds, more than $75, 900 for his own personal use, and approximately $52, 900 to pay Masanko “a portion of the performance fees” charged to the customers that Masanko solicited, id.;

         and it appearing that Plaintiffs filed a six-count Complaint on August 21, 2017 alleging: (1) Fraud in Connection with Forex, id. ¶¶ 64-73; (2) Use of a Manipulative or Deceptive Device, Scheme, or Artifice to Defraud, id. ¶¶ 74-82; (3) Fraud by a Commodity Pool Operator (“CPO”) and Associated Person (“AP”) of a CPO, id. ¶¶ 83-93; (4) Failure to Register as a Commodity Pool by Lanzana and BBP, id. ¶¶ 94-99; (5) Failure to Register as an AP of a CPO by Masanko, id. ¶¶ 100-105; and (6) Prohibited Activities of a CPO by Lanzana and BBP, id. ¶¶ 106-110;

         and it appearing that Defendants have failed to answer or otherwise respond as of the date of this Order;

         and it appearing that Plaintiffs filed the instant Motion for Default Judgment seeking: (1) a permanent injunction to enjoin Defendants from perpetrating future violations of the Act, Pl.'s Br. at 30-31; (2) a permanent injunction prohibiting Defendants from trading in the future, id. at 31-32; (3) Restitution and Disgorgement in the amount of $762, 807.24, id. at 32-34; (4) a Civil Monetary Penalty in the amount of ...


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