The Commodity Futures Trading Commission (CFTC), the U.S. derivatives market regulator, announced that the U.S. District Court of New Jersey issued a final judgment in absentia against Illinois-based Valdas Dapkus on November 28.。On May 4, the court issued final judgment orders in absentia against Tradewale LLC and Tradewale Managed Fund, two entities controlled by Dapkus.。

The court's order resolves a September 2021 lawsuit filed by the U.S. Commodity Futures Trading Commission against the Dapkus and Tradewale entities, finding all of the defendants liable for fraudulently soliciting public investment in so-called retail OTC exchange funds managed by Tradewale and misappropriating investor funds.。Tradewale entity also found liable for not being registered as a commodity trading adviser (CTA)。

The order requires the Dapkus and Tradewale entities, jointly and separately, to pay $713,520 in restitution and $2,140,560 in fines。The order also imposed a permanent injunction on Dapkus and Tradewale entities, barring them from trading in markets regulated by the U.S. Commodity Futures Trading Commission (CFTC) and from engaging in the violations of the Commodity Exchange Act (CEA) alleged in the indictment.。

Case Background

The September 2021 complaint alleges, among other things, that Tradewale made various material misrepresentations and omissions in soliciting transactions from the public, including that it had a "unique trading system" that used "artificial intelligence" to conduct foreign exchange transactions.。Tradewale also claims that it has an average monthly return of 4-11%, an average annual return of more than 55%, and "extremely low risk."。

The complaint also alleges that most, if not all, of Tradewale's customers in the United States were never able to withdraw funds from their accounts, despite Tradewale's solicitation materials claiming that the accounts were "easily accessible."。Instead, the defendant misappropriated client funds for unauthorized purposes, including the misappropriation of funds from a bank account opened by Dapkus as the sole signatory.。

In its order and related opinion, the Court found that the complaint sufficiently alleged that the Dapkus and Tradewale entities knowingly made material false statements and omissions to induce individuals to deposit and invest in Tradewale and then to misappropriate those funds for their own benefit.。The court further found that the Tradewale entity received approximately $713,520 from approximately 17 customers, none of whom received any return on their principal investment.。

The court also found that, according to the charges in the complaint, Tradewale entities acted as CTAs because they raised money for investment vehicles by mail or other interstate commercial means and were not registered with the CFTC.。

The Commodity Futures Trading Commission cautioned that an order requiring repayment of funds to victims may not recover any lost funds because the wrongdoer may not have sufficient funds or assets.。The Commodity Futures Trading Commission said it will continue to fight aggressively to protect customers and ensure wrongdoers are held accountable.。