A former currency trader convicted of defrauding hundreds of investors has been ordered to pay more than $33 million in one of the largest fines against an individual sued by the U.S. Commodity Futures Trading Commission.
However, one of the prosecutors in the criminal case against Russell Cline said the order was "a symbolic victory, unfortunately."
Cline was sentenced last February to eight years in prison for the investment scam he ran through Orion International, the company he founded in 1998 and led until late 2002.
Under a plea bargain in the criminal case, Cline admitted he solicited investors through a Web site, brochures and seminars, then falsely represented that their money would be used to trade in foreign currencies, promising returns of more than 60 % to 200 % annually.
Cline was convicted of mail fraud and money laundering after pleading guilty in U.S. District Court in Portland. He was also ordered to pay $14.9 million in restitution.
U.S. Attorney Karin Immergut said after the sentencing that "victims' lives were ruined, retirements lost, college funds wiped out and bankruptcies realized" because of the investment scam.
In a separate civil case filed in May 2003, the CFTC joined the Oregon Department of Consumer and Business Services to sue Cline and his company for the fraud.
U.S. District Judge Garr King signed a final order in the case last month, and the commission announced it Thursday in Washington.
King ordered Cline to pay nearly $16.6 million in restitution and a fine of $16.6 million.
In a press release, Gregory Mocek, the commission's enforcement director, called the scam "a massive financial fraud" involving more than $40 million.
Assistant U.S. Attorney Allan Garten, who prosecuted Cline in the criminal case, said Thursday it was unlikely much of the money would be recovered because Cline had spent so much of it on gambling, prostitutes and expensive cars.
"There was a lot of wrangling between the CFTC and Cline and Orion but it was like squeezing blood out of a turnip," Garten said.
The judge also issued a permanent injunction against Cline that prohibits him from directly or indirectly trading commodity futures contracts, options on commodity futures contracts, and transactions in foreign currency that are subject to CFTC jurisdiction.