Twin Brothers in Russia Indicted on Federal Charges in $7.2 Million Commodities Fraud Scheme
|U.S. Attorney’s Office October 19, 2012|
CHICAGO—Twin brothers who live in Russia were indicted on federal fraud charges for attempting to illegally turn a profit of $7.2 million through manipulative trades in currency futures using the CME Group’s electronic trading platform. The defendants allegedly engaged in matching trades using two different futures commission merchants in Chicago to obtain profits from one while not paying the corresponding losses to the other.
Marat Yunusov and Ayrat Yunusov, both 48, of Kazan, Russia, were each charged with eight counts of wire fraud and two counts of commodities fraud in a 10-count indictment that was returned by a federal grand jury on Wednesday and announced today. Arrest warrants will be issued in the United States for both men.
The charges were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and William C. Monroe, Acting Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The Commodities Futures Trading Commission assisted in the investigation and filed a civil lawsuit in 2010 that prevented the defendants from obtaining $7.2 million in trading profits.
According to the indictment, between April and June 2010 the defendants entered into a series of currency futures trades on the CME’s Globex electronic trading platform to collect approximately $7.2 million in profits from one futures commission merchant, Velocity LLC, while not paying a corresponding $7.8 million loss to another merchant, Open E Cry LLC. The defendants’ trades substantially exceeded the deposits in Marat Yunusov’s trading account at Open E Cry and intentionally shifted the risk of loss to that merchant.
The defendants allegedly matched their orders for ruble and e-micro British pound futures contracts in their respective accounts at Open E Cry and Velocity by entering a buy or sell order in one account and, within seconds, entering an opposite but equal quantity buy or sell order in the other account. As part of the scheme, the defendants entered their orders in the back of the month contracts where trading volume was low to increase the likelihood of matching the trade orders against each other.
The defendants tested their scheme in April 2010 in preparation for matching a substantially greater volume of trades during overnight trading on June 4, 2010, the charges allege. They calibrated their trades to provide the appearance that profits from pound contract trading covered the losses from the ruble contract trading, the indictment adds.
Each count of commodities fraud carries a maximum penalty of 25 years in prison, and each wire fraud count carries a maximum of 20 years in prison. All 10 counts carry a maximum fine of $250,000 fine, and restitution is mandatory. The court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The government is being represented by Assistant U.S. Attorney Sunil Harjani.
The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov.
An indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.