Martinez’s (I-Trade) in Trouble with NFA – Ingrid Loiten, David Smith named

The NFA document reveals that David Smith is reported as failing to produce banking accounts resulting in him being forced to withdraw as a principal of I-Trade.  The activities of his companies, Olint TCI and TCI FX, are also labeled suspicious by the NFA.

Ingrid Loiten is also named in this complaint being lodged by the National futures Association,(NFA)’s Business Conduct Committee.

Suspicious activity included ‘trading accounts’ with little trading activity and withdrawals and deposits with no seeming business purpose, clear red flags. 

From the case document, the following quotes are of note. 

Item 5

For approximately nine months in 2007,l-Trade listed David Smith (“Smith”) as a principal based on his having contributed almost 100% of the firm’s capital.

Item 7 

As part of its investigation, NFA asked l-Trade to provide Smith’s personal bank records. However, l-Trade claimed that it was unable to obtain Smith’s bank records and, therefore, withdrew Smith as a principal on December 31, 2007 and repaid his membership interest in the firm.

Item 8 

“Although unable to review Smith’s bank records, NFA was able to review the activity in the l-Trade accounts of Smith’s investment clubs (i.e., Olint and TCI). NFA’s review of the activity in these accounts, as well as other accounts at l-Trade, revealed suspicious activity, which l-Trade failed to report by filing a Suspicious Activity Report with federal authorities.”

Item 18 

As hereinafter alleged, highly suspicious activity occurred in a number of l-Trade’s customer accounts between November 2006 and April 2008. Most of the suspicious activity occurred in the accounts related to Smith (i.e., Olint and TCI) and involved activity identified in both NFA’s Interpretive Notice and l-Trade’s own AML program as “red flags.” This activity included extensive and unexplained wire activity; deposits followed by a request to transfer the funds to a third party without any apparent business reason; and unexplained, extensive wire activity with very low trading levels in the accounts.

Item 19

For example, in November 2006, NFA reviewed the activity in an account Olint opened with l-Trade in September 2006. The Olint account opening documents indicated Smith and his wife owned Olint and that the funds in the account came from them only. During the first two months this account was open, no trading activity occurred; however, during this time, Olint made four deposits totaling approximately $59 million and eight withdrawals totaling about $35.5 million.

Loiten (allegedly of May Daisy) named

Item 25, 26

Another account at l-Trade which had suspicious activity was the account of Ingrid Loiten (“Loiten”), which was opened in August 2006. Loiten’s account opening documents listed her annual income and net worth as between $25.000 and $50,000. Yet, between December 2006 and March 2007 , seventeen deposits weremade to Loiten’s account totaling over $1.7 million.

Not only was the size and frequency of the deposits in Loiten’s account inconsistent with her stated annual income and net worth in her account application, but the wire activity in her account was also highly unusual. For example, Loiten opened her account in August 2006 with a $500 deposit and, over the succeeding three months, made four subsequent wire deposits averaging less than $2,000. However, beginning at the end of December 2006, the wire deposits changed dramatically in size and frequency. During the first three months of 2007, Loiten made multiple wire deposits (e.g., five to six per month) in amounts averaging over $100,000 each.

l-Trade did file a SAR for the Loiten account but only after it received information in March 2008 that Zambian authorities had anested Loiten for alleged money laundering. However, l-Trade never filed a SAR for the suspicious activity that took place in Loiten’s account between December 2006 and June 2007.

I-Trade must file a written answer to the complaint with NFA within thirty (30) , days of the date of the Complaint, i.e. by July 31, 2008.

You can and should read the entire document here.

N.B. This article will be updated on an on-going basis. Thanks to poster who pointing out this document.