Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich July 11, 2011

The CFTC has charged unregistered introducing broker (“IB”) CIS Commodities LLC (CIS) and its founder Allen Nicholas Ward, with misappropriation and misrepresentation, and unregistered commodity pool operator (“CPO”) TransGlobal Investments LLC (TransGlobal) and its president Chales Leroy Timberlake with misrepresentation. A federal judge has ordered the defendant’s assets frozen, and prohibited the destruction of its books and records.

Between November 2006 and February 2009, Ward and his Neveda-based company allegedly solicited hundred of thousands of dollars for commodities trading. Ward obtained these funds by falsely claiming to at least one prospective investors that the commodity pool would be handled by an experienced Chicago Mercantile Exchange trader, and that investors could expect a 38% annual rate of return. Commodity pool investor funds were deposited directly into Ward’s personal bank account. In October 2008, Ward told another investor that her money would be traded in a commodity account managed by CIS. Both customers received fabricated statements showing returns on their investment, even though the funds went to cover CIS’s operating costs and Ward’s personal expenses.

The CFTC claims that in March 2007, Ward joined with Timberlake to use TransGlobal as CIS’s commodity trading partner. Together, the two solicited investors across the country and around the world, promising that investments would be held in a segregated account, and would bring consistent 10-30% returns. Timberlake also claimed that TransGlobal was registered as a CPO with the CFTC. Timberlake, Ward, and their companies have never been registered in any capacity with the CFTC or an NFA member. A small percentage of the funds solicited to the false CPO went to a Futures Commission Merchant (“FCM”). Ward and Timberlake told the FCM that they were not trading customer funds, and CIS posed as the fund’s introducing broker.

According to the complaint, the CPO lost $161,000 in commodities trading. However, they sent statements to commodity pool participants showing profitable accounts. In total, Ward and Timberlake misappropriated $175,500, including $65,000 from the TransGlobal commodity pool. The CFTC  is seeking restitution, civil monetary penalties, and trading and registration bans.

 

Read more about this CFTC enforcement action.

Creative Commons License photo credit: Perpetualtourist2000

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