U.S. Commodity Futures Trading Commission v. Safety Capital Management, Inc. et al

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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U.S. COMMODITY FUTURES TRADING
COMMISSION,
:
:
:
REPORT AND
RECOMMENDATION
15-cv-5551 (NGG) (PK)
Plaintiff, 	:
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- against – 	:
:
SAFETY CAPITAL MANAGEMENT, INC. (d/b/a
“FOREXNPOWER”), GNS CAPITAL, INC. (d/b/a
“FOREXNPOWER”), JOHN H. WON, SUNGMI
KANG, and TAE HUNG KANG,
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:
:
:
:
Defendants. 	:
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Peggy Kuo, United States Magistrate Judge:
The U.S. Commodity Futures Trading Commission (the “Commission”) brought this action
against Safety Capital Management, Inc. (d/b/a “ForexnPower”) (“Safety Capital”), GNS Capital, Inc.
(d/b/a “ForexnPower”) (“GNS,” together with Safety Capital, “Defaulting Defendants”), John H.
Won, Sungmi Kang, 1 and Tae Hung Kang (collectively referred to as “Defendants”), alleging
violations of the Commodity Exchange Act, 7 U.S.C. §§ 1 et seq. (2001) (the “Act”) and Commission
Regulations (the “Regulations”) promulgated thereunder, 17 C.F.R. §§ 1.1 et seq. (2001). 	(Compl.,
Dkt. 1.) Before the Court on referral from the Honorable Nicholas G. Garaufis is Plaintiff’s Motion
for Default Judgment (“Motion,” Dkt. 74-1), seeking judgment against the Defaulting Defendants.
(Aug. 25, 2025 Order.) For the reasons stated herein, the undersigned respectfully recommends that
the Motion be granted and damages be awarded as detailed below.
1 On August 25, 2025, the Court dismissed all claims against Sungmi Kang because she had passed away. (Aug.
25, 2025 Order, Dkt. 75 at 2.)
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BACKGROUND
I. 	Factual Background
The following facts are taken from the Complaint (Dkt. 1) and are accepted as true for
purposes of this Motion. See Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009).
Defaulting Defendant Safety Capital is a New York corporation that did business as
“ForexnPower,” and Mr. Kang was its Chief Executive Officer (“CEO”); neither Safety Capital nor
Mr. Kang has ever been registered with the Commission. (Compl. ¶¶ 18, 22.) Safety Capital acted as
an unregistered Commodity Pool Operator (“CPO”) with Mr. Kang as its unregistered Associated
Person (“AP”) when it told retail foreign currency (“forex”) customers that their funds would be
pooled as a commodity pool and that Safety Capital and Mr. Kang would manage that pool. (See id.
¶¶ 49–51.) Instead of using customer pool funds for retail off-exchange forex trading, Safety Capital
misappropriated this money for personal and business expenses. (See id. ¶ 42.)
Defaulting Defendant GNS is a New York corporation that did business as “ForexnPower”
and has been registered with the Commission as a CPO and commodity trading advisor (“CTA”) since
October 21, 2013. (Id. ¶ 19.) GNS’s last known place of business was in Queens, New York. (See id.
¶ 19.) Mr. Won was the President of GNS and was registered with the Commission as an AP of GNS
from August 2013 to February 2014. (Id. ¶ 20.)
Safety Capital and GNS acted as CTAs by collectively managing the retail forex trading
accounts of at least 55 clients, providing retail forex trading advice for compensation or profit, and
using mail, internet, and other means of interstate commerce to engage in retail forex transactions.
(Id. ¶¶ 53–54.)
While acting as unregistered CPOs and CTAs, Safety Capital and GNS did not qualify for any
statutory or regulatory exemptions for registering with the Commission. (See id. ¶¶ 52, 55.)
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Safety Capital and GNS defrauded over 90 customers, in connection with retail off-exchange
forex, of over $1.5 million in violation of the Act. (Id. ¶¶ 1–2.) Through ForexnPower, they placed
advertisements in Korean language newspapers and radio channels falsely representing that they had
a “secret trading method” to generate 10% or more monthly profits. (Id. ¶ 34.) They misappropriated
over $622,000 from retail forex pool participants to pay for their business expenses and salaries instead
of forex trading for investors. (See id. ¶ 43.) As a result, their retail forex customers lost a total of
nearly $400,000. (Id. ¶¶ 3, 48.)
Safety Capital and GNS, while acting as CPOs, failed to operate their commodity pool as a
separate legal entity and commingled pool funds with non-pool property. (Id. ¶ 49.) They solicited
and accepted funds from investors in a commodity pool for trading retail forex contracts and
deposited pool funds into their bank accounts rather than a separate bank account for the pool. (See
id.)
Starting on or about October 21, 2013, GNS was registered with the Commission as a CPO
and CTA. 	(Id. ¶ 51.) 	In April 2014, when the Commission served an administrative subpoena for
documents on GNS at its business address and Mr. Won’s home address, GNS did not respond. (Id.
¶ 60.) Mr. Won acknowledged receipt of the subpoena on behalf of GNS, but he and GNS failed to
produce any information responsive to the Commission’s subpoena. (Id. ¶ 61.)
II. 	Complaint
On September 24, 2015, the Commission filed a six-count Complaint against Defendants,
alleging that from at least October 2010 through December 2013, Defendants, while acting as CTAs
and CPOs, or APs thereof, fraudulently solicited customers and prospective customers for the
purported purpose of trading a pooled investment in connection with agreements, contracts, or
transactions in off-exchange foreign currency forex or to open retail forex accounts purportedly
managed by Safety Capital and GNS. (See id. ¶¶ 1, 34).
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The Complaint alleges six violations of the Act and Regulations:
1) 	Count 1: Retail forex fraud in violation of Sections 4b(a)(2)(A) and (C), 7 U.S.C. §
6b(a)(2)(A) and (C), and Regulation 5.2(b)(1) and (3), 17 C.F.R. 5.2(b)(1) and (3);
2) 	Count 2: Fraud by a CPO or CTA (or AP thereof) in violation of Section 4o(1)(A)–
(B), 7 U.S.C. § 6o(1)(A)–(B);
3) 	Count 3: Solicitation and acceptance of retail forex orders from retail forex
clients without being registered in violation of Section 2(c)(2)(C)(iii)(I)(aa)–(cc), 7
U.S.C. § 2(c)(2)(C)(iii)(I)(aa)–(cc);
4) 	Count 4: Commingling pool funds with non-pool property in violation of
Regulation 4.20(a)–(c), 17 C.F.R. § 4.20(a)–(c);
5) 	Count 5: Failure to register as retail forex CPOs and CTAs in violation of Section
4m(1), 7 U.S.C. § 6m(1), and Regulation 5.3(a)(2)–(3), 17 C.F.R. § 5.3(a)(2)–(3); and
6) 	Count 6: Failure to produce documents upon request from the Commission in
violation of Regulation 1.31, 17 C.F.R. § 1.31.
The Commission alleges that Safety Capital violated Counts 1 through 5, and that GNS
violated Counts 1 through 6. (Compl. ¶¶ 62–110.) The Complaint also alleges that as a controlling
person of Safety Capital, Mr. Kang violated Counts 1 through 5 and as a controlling person of GNS,
Mr. Won violated all six counts against GNS. (Id.)
III. 	Relevant Procedural Background
On October 5, 2015, the Summons and Complaint were served on Defendants, and proof of
service was filed with the Court. (See Motion at 6; Proof of Service of Summons, Dkts. 5–6.) Mr.
Kang and Mr. Won appeared pro se, but neither Safety Capital nor GNS filed an answer or otherwise
responded to the Complaint, and on November 30, 2015, the Clerk entered certificates of default
against them. (Certificate of Default against GNS, Dkt. 9; Certificate of Default against Safety Capital,
Dkt. 10.)
Mr. Kang and Mr. Won were both charged in criminal proceedings in connection with the
ForexnPower fraudulent scheme. 	On March 30, 2021, Mr. Kang pled guilty to securities fraud
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conspiracy. 	(See Guilty Plea, United States v. Kang, No. 18-CR-184 (RJD), Dkt. 117 (E.D.N.Y. filed
Mar. 30, 2021).) On November 9, 2021, a jury found Mr. Won guilty of conspiracy to commit wire
fraud, conspiracy to commit security fraud, conspiracy to commit money laundering, and securities
fraud. (See Jury Verdict, United States v. Won, No. 18-CR-184 (RPK), Dkt. 167 (E.D.N.Y. filed Nov.
12, 2021).)
On August 31, 2022, the Court entered a Consent Order and Final Judgment against Mr.
Kang, finding him liable for Counts 1 and 2. (Dkt. 62 at 7–8.) On September 19, 2024, upon motion
by Plaintiff, the Court entered summary judgment against Mr. Won, finding him liable for Counts 1
through 6. (See John Won Summary Judgment Order (“SJ Order”), Dkt. 66 at 3, 11–16.)
On August 21, 2025, Plaintiff filed the Motion, seeking default judgment against Safety Capital
and GNS. A motion hearing was held, and on December 15, 2025, Plaintiff supplemented its Motion
(“Supplemental Motion,” Dkt. 79) and attached a spreadsheet analyzing Defaulting Defendants’ bank
accounts and their transactions with past customers (See Dkt. 79-2).
DISCUSSION
I. 	Legal Standard for Default Judgment
Rule 55 of the Federal Rules of Civil Procedure prescribes a two-step process for entry of a
default judgment. 	First, when a defendant “has failed to plead or otherwise defend,” the Clerk of
Court enters the defendant’s default. Fed. R. Civ. P. 55(a). The plaintiff may then move the court for
an entry of default judgment. Fed. R. Civ. P. 55(b)(2). However, “just because a party is in default,
the plaintiff is not entitled to a default judgment as a matter of right.” GuideOne Specialty Mut. Ins. Co.
v. Rock Cmty. Church, Inc., 696 F. Supp. 2d 203, 208 (E.D.N.Y. 2010).
The Court may “first assure itself that it has personal jurisdiction over the defendant.” 	City of
New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 133 (2d Cir. 2011) (internal quotation omitted).
Plaintiff must demonstrate proper service of the summons and complaint, see Advanced Cap. Com. Grp.,
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Inc. v. Suarez, No. 09-CV-5558 (DRH)(GRB), 2013 WL 5329254, at *2 (E.D.N.Y. Sep. 20, 2013), and
establish compliance with the procedural requirements of Local Civil Rules 7.1 and 55.2. See L.R. 7.1,
55.2.
In addition, the Court must also determine whether Plaintiff’s “allegations establish [the
defendant’s] liability as a matter of law.” See Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009); see
also Mickalis, 645 F.3d at 137. In considering a motion for default judgment, a court accepts a plaintiff’s
“factual allegations as true and draw[s] all reasonable inferences in [the plaintiff’s] favor . . . .” Finkel,
577 F.3d at 84. 	However, a default is “not considered an admission of damages.” 	Greyhound
Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). “The plaintiff bears the
burden of presenting proof of damages, which may take the form of documentary evidence or detailed
affidavits.” Joe Hand Promotions, Inc. v. Benitez, No. 18-CV-6476 (ARR)(PK), 2020 WL 5519200, at *3
(E.D.N.Y. Aug. 27, 2020), R&R adopted, 2020 WL 5517240 (E.D.N.Y. Sept. 14, 2020).
A court “possesses significant discretion” in granting a motion for default judgment,
“including [determining] whether the grounds for default are clearly established . . . .” 	Klideris v.
Trattoria El Greco, No. 10-CV-4288 (JBW)(CLP), 2011 WL 7114003, at *2 (E.D.N.Y. Sep. 23, 2011),
R&R adopted, 2012 WL 273078 (E.D.N.Y. Jan. 30, 2012).
II. 	Jurisdiction and Default
A. Subject Matter Jurisdiction
The Court has original subject matter jurisdiction over Plaintiff’s claims pursuant to 28 U.S.C.
§ 1331 and 28 U.S.C. § 1345.
B. Personal Jurisdiction
“[S]erving a summons . . . establishes personal jurisdiction over a defendant . . . who is subject
to the jurisdiction of a court of general jurisdiction in the state where the district court is located.”
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Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 59 (2d Cir. 2012) (quoting Fed. R. Civ.
P. 4(k)(1)(A)). 	New York has general jurisdiction over corporations formed under its laws and
operating within the state. 	Francis v. Ideal Masonry, Inc., No. 16-CV-2839 (NGG)(PK), 2018 WL
4292171, at *3 (E.D.N.Y. Aug. 3, 2018), R&R adopted, 2018 WL 4288625 (E.D.N.Y. Sep. 7, 2018).
Defaulting Defendants are New York corporations. On October 5, 2015, Plaintiff properly
served Safety Capital and GNS by delivering copies of the summons and complaint to the New York
Secretary of State. (See Affs. of Service, Dkts. 5–6); see also Fed. R. Civ. P. 4(e); N.Y. Bus. Corp. Law
§ 306(b)(1); Burns v. Scott, 635 F. Supp. 3d 258, 273 (S.D.N.Y. 2022). 	Accordingly, the Court has
personal jurisdiction over Defaulting Defendants.
C. Defendants’ Default
Defaulting Defendants did not appear through counsel as required for corporations (see
Latttanzio v. COMTA, 481 F.3d 137, 139 (2d Cir. 2007)) or otherwise respond to the Complaint, and
have, therefore, defaulted.2
III. 	Procedural Compliance
As part of this Motion and in compliance with the Local Civil Rules, Plaintiff included a Notice
of Motion (Dkt. 74), see L.R. 7.1(a)(1); a Memorandum of Law in support of the Motion (Motion, Dkt.
74-1), see L.R. 7.1(a)(2); a declaration showing that the Clerk has entered default and that Defendants
are not incompetent or minors (Dkt. 74-2), see L.R. 55.2(a)(1); a Proposed Default Judgment Order
detailing the proposed judgment to be entered (Dkt. 74-3), see L.R. 55.2(a)(2); proof of having mailed
the motion papers and the Clerk’s Certificate of Default to Defaulting Defendants at their last known
business addresses (Affs. of Service, Dkts. 74, 78, 80–81.), see L.R. 55.2(a)(3); a statement of damages
with supporting documentation affirmed by Plaintiff’s financial investigator with personal knowledge
2 Mr. Won appeared at the November 25, 2025 Motion Hearing and objected to Plaintiff’s arguments in support
of the Motion. However, because Mr. Won is not an attorney, he may not appear on behalf of GNS.
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(Giglio Decl. to the Motion, Dkt. 74-2; Giglio Decl. to the Supplemental Motion, Dkt. 79; Spreadsheet
Analyzing Safety Capital’s and GNS’s Bank Accounts, Dkt. 79-2), see L.R. 55.2(c).
IV. 	Analysis
Counts 1 through 5 are brought against both Safety Capital and GNS, and Count 6 is only
brought against GNS. (Compl. ¶¶ 62–110.) Plaintiff states that it relies on the “well-pled allegations
of the Complaint” (See Nov. 25, 2025 Hr’g Tr. 5:6–13:12; Motion at 17; Supplemental Motion at 4–
7). 3
A. Count 1 against Safety Capital and GNS: Retail Forex Fraud, Sections
4b(a)(2)(A) and (C), 7 U.S.C. § 6b(a)(2)(A) and (C), and Regulation
5.2(b)(1) and (3), 17 C.F.R. 5.2(b)(1) and (3)
Plaintiff contends that Safety Capital and GNS are liable for Count 1 because they intentionally
or recklessly made false and misleading misrepresentations to forex customers. 	(Compl. ¶¶ 62–72;
Supplemental Motion at 4–5.)
Under sections 4b(a)(2)(A) and (C) of the Act, it is unlawful to contract the sale of a
commodity in interstate commerce through attempted or actual fraud and cheating, as well as willful
or attempted deceit. See 7 U.S.C. § 6b(a)(2)(A), (C).
Sections 5.2(b)(1) and (3) of the Regulations also prohibit the use of mail or “any means or
instrumentality of interstate commerce” for retail forex transactions as a way to cheat, defraud,
mispresent, or deceive others. See 17 C.F.R. 5.2(b)(1)–(3).
3 Plaintiff also contends that res judicata precludes Safety Capital from relitigating Counts 1 and 2 and GNS from
relitigating Counts 1 through 6 based on the judgments entered against Mr. Kang and Mr. Won. (See Motion
15–17.) However, Plaintiff has not stated a basis for applying res judicata offensively rather than defensively.
See Thermal Surgical, LLC v. Brown, 150 F.4th 115, 121 (2d Cir. 2025) (“[W]e have serious doubts as to whether
preclusion can ever be used offensively to compel a judgment rather than resist a claim.”). Because I find liability
based on the well-pled allegations of the Complaint, consideration of Plaintiff’s res judicata argument as a basis
for entering judgment is unnecessary.
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Safety Capital and GNS falsely guaranteed 10% profits per month for off-exchange retail forex
transactions without any risk of loss. 	(Compl. ¶¶ 34, 66–67.) 	However, their customers never
obtained 10% monthly profits and instead, lost money. 	(See id.) 	Safety Capital and GNS also
misrepresented to customers that they would obtain $100,000 in profit from a $500 investment and
misappropriated customer funds for personal and business expenses rather than trading forex
transactions. (See Compl. ¶¶ 34, 42, 66–68.)
Accordingly, I find that Safety Capital and GNS are liable for retail forex fraud as set forth in
Count 1.
B. Count 2 against Safety Capital and GNS: Fraud by a CPO or CTA (or AP
thereof) in violation of Section 4o(1)(A)–(B), 7 U.S.C. § 6o(1)(A)–(B)
Plaintiff contends that Safety Capital and GNS, in unregistered capacities, committed fraud as
CPOs or CTAs. (See Compl. ¶¶ 34–46, 76–79; Supplemental Motion at 5.)
The Act prohibits registered and unregistered CTAs, CPOs, and APs of CTAs and CPOs from
using the mail or “any means or instrumentality of interstate commerce” to defraud or deceive others.
See 7 U.S.C. § 6o(1)(A)–(B).
Safety Capital and GNS acted as CPOs when they “represented to pool participants that they
would use pool funds to trade retail off-exchange forex transactions” on behalf of the participants.
(See Compl. ¶ 42.) Safety Capital and GNS also acted as CTAs when they advised customers about
retail forex transactions through “publications, writings, or electronic media.” 	(See id. ¶ 76.) 	As
discussed supra, Safety Capital and GNS committed fraud against their customers through multiple
instances of false guarantees, misrepresentations, and acts of misappropriation, and they did so while
acting as CPOs and CTAs.
Accordingly, I find that Safety Capital and GNS are liable for fraud as CPOs and CTAs as set
forth in Count 2.
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C. Count 3 against Safety Capital and GNS: Solicitation and Acceptance of
Retail Forex Orders from Retail Forex Clients without Being Registered, 7
U.S.C. § 2(c)(2)(C)(iii)(I)(aa)–(cc)
Plaintiff contends that Safety Capital and GNS are liable under Count 3 because they were
never registered with the Commission when they solicited or accepted retail forex trading orders, and
they never qualified for any Commission exemptions. 	(See Compl. ¶¶ 34–48; 50–55; Supplemental
Motion at 5.)
The Act prohibits an unregistered person from soliciting or accepting orders from a non-
eligible contract participant to conduct forex transactions, exercising discretionary trading authority
over forex transactions, or operating or soliciting funds for a commodity pool in connection with
transactions in foreign currencies. 7 U.S.C. § 2(c)(2)(iii)(I)(aa)–(cc).
Safety Capital has never been registered with the Commission, and GNS only registered with
the Commission on or around October 21, 2013. (See Compl. ¶¶ 50–55.) Nevertheless, from at least
October 2010 through December 2013, Safety Capital and GNS traded and managed retail forex
contracts for customers, solicited investors in a commodity pool, and traded retail forex contracts with
customer funds as a single unit. (See id. ¶¶ 34–48; 50–55; see also Supplemental Motion at 5–6; SJ Order
at 16–17.)
Accordingly, I find that Safety Capital and GNS are liable for violating retail forex prohibitions
as set forth in Count 3.
D. Count 4 against Safety Capital and GNS: Commingling Pool Funds with
Non-Pool Property, 17 C.F.R. § 4.20(a)–(c)
Plaintiff argues that Safety Capital and GNS violated Count 4 when they deposited pool funds
into their own bank accounts rather than separate bank accounts. 	(See Compl. ¶ 49; Supplemental
Motion at 6.)
The Commission’s Regulation 4.20(a) requires CPOs, whether registered or not, to operate
their commodity pools as legal entities separate from that of the CPOs. See 17 C.F.R. § 4.20(a).
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The Commission’s Regulations 4.20(b) and (c) also prohibit CPOs, whether registered or not,
from receiving pool participants’ funds in any name other than that of the pool and from commingling
pool property with non-pool property. See 17 C.F.R. § 4.20(b)–(c).
Safety Capital and GNS commingled pool funds with non-pool property by depositing pool
participant funds in the same bank accounts used for ForexnPower’s salaries and business expenses,
instead of depositing customer funds into a separate bank account in the pool’s name. (See Compl. ¶
49; Supplemental Motion at 6; see also SJ Order at 19.)
Accordingly, I find that Safety Capital and GNS are liable for commingling pool funds with
non-pool property as set forth in Count 4.
E. Count 5 against Safety Capital and GNS: Failure to Register as a Retail
Forex CPO and CTA, 7 U.S.C. § 6m(1) and 17 C.F.R. § 5.3(a)(2)–(3)
Plaintiff argues that Safety Capital and GNS are liable under Count 5 because they acted as
unregistered CPOs through the solicitation and acceptance of pool funds and as unregistered CTAs
through the collective management of retail forex trading accounts of at least 55 clients. (See Compl.
¶¶ 50–55; Supplemental Motion at 6.)
Under Section 4m(1) of the Act, it is unlawful for unregistered CPOs or CTAs to use mail or
any means or instrumentality of interstate commerce in connection with their businesses as CPOs or
CTAs. 7 U.S.C. § 6m(1).
Regulations 5.3(a)(2) through (3) also require that all CPOs and CTAs register with the
Commission. 17 C.F.R. § 5.3(a)(2)–(3).
Safety Capital has never registered as a CPO or CTA, and GNS was not registered as a CPO
or CTA before or around October 21, 2013. (See Compl. ¶¶ 50–55; see also Supplemental Motion at 6;
SJ Order at 16.) 	Nevertheless, Safety Capital and GNS acted as CPOs and CTAs in unregistered
capacities during the time they were unregistered. (See Compl. ¶¶ 42, 76.)
Accordingly, I find Safety Capital and GNS are liable under Count 5 for failure to register as
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retail forex CPOs and CTAs.
F. Count 	Six 	against 	GNS: 	Failure 	to 	Produce 	Documents 	upon 	the
Commission’s Request, 17 C.F.R. § 1.31
Plaintiff contends that GNS violated Count 6 because, despite being registered with the
Commission on or around April 2014, GNS failed to respond to Plaintiff’s document subpoena. (See
Compl. ¶¶ 107–09.)
Regulation 1.31 requires a party registered with the Commission to open its books and records
to inspection by any representative of the Commission and produce its books and records in a form
specified by any representative of the Commission. See 17 C.F.R. § 1.31.
Starting on or about October 21, 2013 when GNS registered with the Commission as a CPO
and CTA through the present, GNS was required to respond to any of Plaintiff’s requests for
documents. See id.; (see also Compl. ¶ 51.) In April 2014, Plaintiff served an administrative subpoena
on GNS at its registered business address, as well as the home address of Mr. Won, GNS’s President.
(See Compl. ¶ 60.) Mr. Won verbally acknowledged receipt of Plaintiff’s subpoena, yet GNS failed to
produce documents. (See id. ¶ 61.) Therefore, GNS violated Regulation 1.31.
Accordingly, I find that GNS is liable under Count 6 for failure to produce documents upon
the Commission’s request.
V. 	Relief
The Commission seeks a permanent injunction, full restitution, and the imposition of a civil
monetary penalty. (See Motion at 17–23.)
A. Permanent Injunction
Pursuant to Section 6(c) of the Act, the Commission may seek a permanent injunction
prohibiting a defendant from engaging in conduct that violates any provision of the Act or any rule,
regulation, or order thereunder. See 7 U.S.C. § 13a-1; see also CFTC v. Kim, No. 11-CV-1013 (DLC),
2011 WL 1642772, at *1 (S.D.N.Y. Apr. 15, 2011). To obtain this relief, the Commission need only
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show that a violation of the Act occurred and that there is a reasonable likelihood that the violation
will be repeated. 	CFTC v. Commodity Inv. Grp., No. 05-CV-5741 (HB), 2006 WL 353466, at *1
(S.D.N.Y. Feb. 11, 2006) (citing CFTC v. British Am. Commodity Options, 560 F. 2d 135, 141 (2d Cir.
1977)). Moreover, a district court may infer the likelihood of future violations from the defendant’s
past unlawful conduct. CFTC v. Kelly, 736 F. Supp. 2d 801, 804 (S.D.N.Y. 2010) (citing CFTC v. Am.
Bd. of Trade, Inc., 803 F. 2d 1242, 1250–1251 (2d Cir. 1986)).
Safety Capital’s and GNS’s past unlawful conduct indicates a likelihood of continued
violations absent a permanent injunction. As previously found with regard to Mr. Won, Defaulting
Defendants committed numerous knowingly fraudulent acts of solicitation and misappropriation of
customer funds over several years. 	(See SJ Order at 20.) 	Defaulting Defendants’ actions were not
isolated occurrences; rather, they engaged in a comprehensive scheme that demonstrated a pattern of
intentional fraudulent behavior. (See id.)
Based on these facts, I find that there is a “reasonable likelihood” of future violations. 	See
Commodity Inv. Grp., 2006 WL 353466, at *1. Accordingly, I respectfully recommend that the Court
grant the permanent injunction in the manner detailed in the Commission’s Proposed Order. See 7
U.S.C. § 13a-1 (“Upon a proper showing a permanent or temporary injunction or restraining order
shall be granted without bond.”); see also CFTC v. Int’l Foreign Currency, Inc., No. 03-CV-3577 (DLI)
(ARL), 2012 WL 13105801, at *5 (E.D.N.Y. Jan. 30, 2012).
B. Restitution
Pursuant to Section 6(c) of the Act, a district court has the authority to grant ancillary relief
for violations of the Act, including but not limited to, ordering restitution. 7 U.S.C. § 13a-1(d)(3)(A).
Restitution is calculated as the amount of losses proximately caused by such violation. See id. “The
Second Circuit has concluded that the proper measure of restitution is the benefit unjustly received
by a defendant or a defendant’s illegally gotten gains.” Int’l Foreign Currency, Inc., 2012 WL 13105801,
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at *6 (quoting CFTC v. Rolando, 589 F. Supp. 2d 159, 173 (D. Conn. 2008)).
Joint and several restitution in the amount of $835,058 was ordered against Mr. Kang and Mr.
Won. (SJ Order at 3; Kang Consent Order at 10.)
I respectfully recommend that the Court find Safety Capital and GNS liable for the amount
defrauded from victims and grant the Commission’s request to order that Safety Capital and GNS pay
$835,058 as restitution, jointly and severally with Mr. Kang and Mr. Won.
C. Civil Monetary Penalty
Section 6c(d)(1) of the Act and Regulation 143.8(b) permit the Commission to seek, and give
the Court jurisdiction to impose, a civil penalty on any person found in the action to have committed
any violation of the Act. 7 U.S.C. § 13a-1(d)(1); 17 C.F.R. § 143.8(b)(1)–(2). “The purpose of such
sanction is to further the Act’s remedial policies, and deter others from committing similar kinds of
violations.” Int’l Foreign Currency, Inc., 2012 WL 13105801, at *6 (citing Reddy v. CFTC, 191 F. 3d 109,
123 (2d Cir. 1999)). 	Given that Safety Capital and GNS’s conduct occurred from at least October
2010 through December 2013, the civil monetary penalty may be up to the greater of $140,000 per
violation or triple a defendant’s monetary gain. See 7 U.S.C. § 13a-1(d)(1); 17 C.F.R. § 143.8(b)(1)–(2).
“[C]ivil monetary penalties are appropriate where they are commensurate with the gravity of
the violations found and where they reflect and seek to deter the betrayal of the public interest caused
by a defendant’s abuse of customers and a regulated public market.” Int’l Foreign Currency, Inc., 2012
WL 13105801, at *6 (citing Reddy, 191 F. 3d at 128). As previously found with Mr. Won, Defaulting
Defendants not only engaged in a systematic and deliberate scheme to defraud the public, but they
deliberately exploited their access to a vulnerable community—Korean-language speakers in Queens
who were totally reliant on Defendants to protect and manage their investments. (See SJ Order at 22.)
The Commission alleges that Safety Capital obtained approximately $480,381, and GNS
obtained approximately $62,034 from the fraudulent scheme. (See Giglio Decl. to Motion, Dkt. 74-2
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¶¶ 10–11; Giglio Decl. to Supplemental Motion, Dkt. 79-1 ¶ 4; Spreadsheet Analyzing Safety Capital’s
and GNS’s Bank Accounts, Dkt. 79-2.) Given Safety Capital and GNS’s egregious conduct and to
deter future conduct, I respectfully recommend that the Court grant, pursuant to Section 6c(d)(1)(A)
of the Act, the Commission’s request for a civil monetary penalty of triple the monetary gain (see
Motion at 23), which would equal $1,441,143 against Safety Capital and $186,102 against GNS. See,
e.g., Int’l Foreign Currency, Inc., 2012 WL 13105801, at *6 (imposing penalty of $120,000 per violation
for total of $3,840,000 for fraudulent scheme involving 32 victims and 32 separate violations of the
Act).
CONCLUSION
Based on the foregoing, I respectfully recommend that the Motion be GRANTED, and that
Safety Capital be found liable for the violations charged in Counts 1 through 5, and GNS be found
liable for the violations charged in Counts 1 through 6. I also respectfully recommend that the Court
grant the permanent injunction detailed in the Commission’s Proposed Order, order that Safety
Capital and GNS pay $835,058 as restitution, jointly and severally with Mr. Kang and Mr. Won, and
impose civil penalties of $1,441,143 against Safety Capital and $186,102 against GNS.
Any objection to this Report and Recommendation must be filed in writing with the Clerk of
Court within fourteen (14) days of service. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). Failure to
timely file any such objection waives the right to appeal to the District Court’s Order. 	Caidor v.
Onondaga Cnty., 517 F.3d 601, 604 (2d Cir. 2008).
SO ORDERED:
Peggy Kuo
PEGGY KUO
United States Magistrate Judge
Dated: 	Brooklyn, New York
February 13, 2026
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