CFTC Cracks Down on Commodity Pool Ponzi Schemes

CFTC Cracks Down on Commodity Pool Ponzi Schemes

The U.S. Commodity Futures Trading Commission (CFTC) issued a statement yesterday announcing that Judge Edward J. Lodge of the U.S. District Court of Idaho entered a permanent injunction requiring Trigon Group, Inc, to return $20.6 million in ill-gotten gains. Trigon is accused of operating a commodity pool Ponzi scheme.

The order also imposes permanent trading and registration bans against Trigon and defendant Daren L. Palmer.

The CFTC statement explains:

The consent order finds that, from at least September 2000 to date of the complaint, defendants directly and indirectly solicited at least $40 million from at least 57 individuals or entities to invest in Trigon entities. Pool participants understood that their funds would be used for trading commodity futures on their behalf, among other things, S&P 500 index futures contracts. Defendants made repeated misrepresentations that the pool was profitable and growing. In fact, defendants misappropriated the vast majority of the funds invested by pool participants. The consent order also finds that the defendants violated registration requirements as charged.

CFTC Charges Arizona Man with Commodity Pool Ponzi Scheme

The CFTC announced this morning that it has filed a civil enforcement complaint charging Ray Thomas Brown of Arizona with operating two commodity schemes over the last two years.

The complaint charges Brown with soliciting members of the public to join in a commodity pool while acting as an unregistered commodity pool operator. In the process, Brown apparently tricked persons to allow him access into their commodity futures accounts. How did Brown get access? The CFTC report sheds some light:

Brown’s fraud allegedly included misrepresentations and omissions about his past trading success, trading profits, trading expertise, and personal history, the dissemination of false account statements, and the misappropriation of customer funds.

Using this method, Brown was able to trick would-be investors into placing $1.2 million to accounts in his control.

See the CFTC statements here and here.

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About The Author


Elan Mendel

Elan Mendel

Elan Mendel is an associate with Shipkevich PLLC, and has done registration, compliance, and enforcement defense work for commodities, futures and forex firms registered with the CFTC and NFA as FCMs, RFEDs, and others. Elan also specializes in domestic and cross-border insolvency issues.

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