A Thai man today admitted to orchestrating a scheme to defraud hundreds of investors worldwide of approximately $1.4 million through his operation of Nonko Trading, a purported online day trading firm, Acting U.S. Attorney William E. Fitzpatrick announced.
Also, a federal grand jury has indicted two conspirators in connection with the scheme. Naris Chamroonrat, 33, of Bangkok, Thailand, pleaded guilty today before U.S. District Judge Jose L. Linares in Newark federal court to an information charging him with one count of conspiracy to commit securities fraud.
On May 10, 2017, a federal grand jury returned an indictment against Yaniv Avnon, 36, of Tel Aviv, Israel, and Ran Armon, 45, of Toronto, Canada, who are each charged with one count of conspiracy to commit securities fraud and one count of wire fraud.
According to documents filed in the case and statements made in court:
Between December 2013 and June 2015, Chamroonrat, Avnon, Armon and their conspirators solicited individual investors to open day trading accounts with Nonko and to wire thousands of dollars to Nonko to fund those accounts. Instead, the conspirators allegedly stole the victims’ money. To cover up the theft, they provided the victims with online trading simulator, or “demo,” accounts, and told the investors that they were real accounts to be used for trading securities. They allegedly misappropriated at least $1.4 million from more than 260 investors from 30 countries, including at least 180 investors from the United States, several of whom are in New Jersey.
The conspirators selected as victims only those customers who they believed would not be profitable day-traders and would be less likely to seek to withdraw funds from their accounts. They limited the scheme to inexperienced, unsophisticated “losing” traders because those customers would simply believe they lost their money trading in the open markets. If traders on the demo accounts started to appear profitable, Nonko would switch them to real accounts.
The conspirators discussed the scheme in detail in email and online chat communications. In one online chat communication between Chamroonrat and Avnon on Feb. 2, 2014, Avnon referred to the profits that the scheme had generated the prior month, noting, “It was a huge month, huge month means that a lot of traders got burned .... New blood, all the time, that’s what we need[.]” Although Nonko paid back a small percentage of customers, the majority of misappropriated funds were transferred to foreign bank accounts controlled by Chamroonrat and used for personal expenses or other unauthorized transactions, including transferring proceeds of the scheme to Avnon and Armon.
The conspiracy count in the information and indictment carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense. The wire fraud count in the indictment carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. Sentencing for Chamroonrat is scheduled for Sept. 20, 2017.
In a separate civil action, the Securities and Exchange Commission today filed an amended complaint in Newark federal court charging Avnon and Armon with, among other things, violating and aiding and abetting violations of the antifraud provisions of the securities laws.
The amended complaint seeks a permanent injunction as well as the return of ill-gotten gains plus interest and penalties. Before amending the complaint, the SEC had asserted similar claims against Chamroonrat.