The United States Securities and Exchange Commission (SEC) is pushing for a default judgment against Michael Ackerman, principal of fraudulent cryptocurrency scheme Q3 Trading Club. Earlier today, the regulator submitted a motion for default as to Ackerman at the New York Southern District Court.
As set forth in the SEC’s Complaint, Ackerman knowingly misappropriated investor funds for his own personal use, in direct contravention of the promises he made to investors. To conceal his misconduct, Ackerman fabricated account balances and used investor money to pay investor their purported investment returns in Ponzi-like fashion. The conduct was not isolated, but occurred over the course of years.
Given the egregious nature of the misconduct, Ackerman’s high degree of scienter, and Ackerman’s failure to take any responsibility for his actions, the SEC today asked the Court to enter a permanent injunction against Ackerman.
The Commission also seeks an Order directing Ackerman to disgorge his ill-gotten gains with prejudgment interest, and to pay a civil money penalty. The Commission asks that the Court enter this relief but determine the amounts of disgorgement and a civil penalty after the resolution of two parallel matters that must conclude before this Court can determine the appropriate disgorgement and penalty amounts in this case: CFTC v. Ackerman, 1:20-cv-01183-NRB (SDNY), U.S. v. Ackerman, 20-cr-00093-LTS (SDNY).
As FX News Group has reported, the Commodity Futures Trading Commission (CFTC) is seeking restitution from Ackerman and the Q3 Companies based on the same fraud at issue in this case.
In the CFTC case, the CFTC has filed a motion for final judgment by default in which it seeks restitution of about $23 million, an amount equal to the amount of the alleged customer losses. Meanwhile, in the criminal case, the government is seeking restitution against Ackerman.
The SEC asks to be allowed to file a supplemental memorandum on disgorgement after restitution, if any, has been ordered in both the pending CFTC and criminal cases against Ackerman.
Thus, the SEC is seeking entry of an Order of Default Judgment against Ackerman that imposes a permanent injunction, with the amounts of disgorgement and a civil penalty being determined upon the Commission’s supplemental filing after the Court has entered restitution in the CFTC and criminal cases against Ackerman and after Ackerman has been sentenced.