The Ontario Court of Justice sentenced account executive Jose Castaneda to two years less a day imprisonment on one count of fraud over $5,000, last Friday.

In addition, Castaneda received a six-month prison sentence for trading in securities without being registered to do so. He’ll also face a separate six-month sentence for contravening Ontario Securities Law by trading in securities while subject to an OSC cease-trade order that began in June 2000 and expired on June 7, 2005. The cease order applied to Koman Info-Link Inc., Koman Investment Inc., Simon Ko and Castaneda. His three sentences will be served concurrently.

In 2000, Castaneda admitted that he was an account executive for some of the clients of Koman, and exercised complete discretionary trading authority for investors in respect of forex contracts. Castaneda also admitted that he traded in forex contracts without registration and that some of the investors for whom he acted as an Account Executive suffered significant trading losses.

The court also ordered Castaneda to make payments totalling $848,500 to his victims.

The OSC proceedings against Castaneda will continue on February 19, 2008.

In 2005, the OSC alleged that Castaneda appropriated over $1 million from investors for the ostensible purpose of trading in foreign currencies. Castaneda did not disclose to investors the fact that he was subject to an existing cease trade order. Many contributors did not receive any return on their investments, as Castaneda lost a substantial portion of their funds in currency and commodity futures trading and converted whatever funds were remaining to his own personal use.