Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich September 12, 2011

The CFTC has obtained an emergency order freezing the assets of Toby D. Hunter and his companies, Prestige Capital Advisors and D2W Capital Management in connection with foreign exchange (“forex”) and commodity futures solicitation fraud charges. D2W and Prestige are both registered Commodity Trading Advisors (“CTAs”) The order prohibits the destruction of books and records, and Hunter has been ordered to appear in court on October 3, 2011.

According to the complaint, the North Carolina man and his two CTAs fraudulently solicited customers to invest funds in commodity futures, options on futures, and managed forex accounts beginning in April 2008. Hunter show prospective clients allegedly false historical returns, both via email and on the website BarclayHedge. Hunter later admitted that he had no data to back up statistics posted on the website. In this manner, Hunter was able to solicit $2.36 million from 17 people. This money was placed into bank accounts to be managed by CTA D2W.

The CFTC says that accounts managed by D2W traded at a net loss for the relevant period, but Hunter sent false account statements showing profits to his clients. In total, D2W customers lost $1.61 million, about 68% of their total funds. In 2010, Hunter formed a second CTA, Prestige, purportedly to trade spot currency, precious metals, commodity futures, and other financial instruments. He told clients that Prestige would not co-mingle investor funds, and posted allegedly false “Monthly Performance Updates” on BarclayHedge, enabling him to solicit $4.65 million. $1.16 million was lost in trading, $84,000 was returned to participants, $370,000 is still in Prestige accounts, and $3.04 million remains unaccounted for. At least one participant was sent a false account statement which did not reflect the substantial losses sustained in trading.

The NFA noticed inconsistencies in the CTAs’ accounts were noticed during an audit, the details of which were reported on in a previous CFTC Law story. The CFTC is seeking the return of ill-gotten gains, restitution to defrauded customers, civil monetary penalties, and trading and registration bans.

Read more about this CFTC enforcement action.
Creative Commons License photo credit: Patrick Hoesly