The CFTC announced today that is has charged Victor Eugene Cilli and his company Progressive Investment Funds LLC (Progressive) with operating a commodity pool Ponzi scheme. The commodity pool operator, or CPO, allegedly defrauded four investors of a half million dollars, and Cilli is said to have stolen $200,000 in pool funds to pay personal expenses, including payments on a motorcycle and visits to a hair stylist. Cilli was a registered Associated Person (AP) of the New Jersey-based CPO.
According to the complaint, from September 2006 to February 2009, Cilli and Progressive lied to the commodity pool’s participants about Cilli’s business experience and performance history. For example, the CPO claimed that Cilli was a successful manager when in fact he had a $13.5 million bankruptcy in 2002 and had one month of futures trading experience.
Furthermore, the defendants provided the commodity pool’s investors with doctored statements showing profits when in fact the CPO experienced dismal losses. To keep the ruse going, Cilli made Ponzi-like payments to investors who needed reassurance. Finally, according to the complaint, Cilli gave the NFA false information about the composition of the commodity pool, and did not maintain the proper documentation.
The CFTC is seeking restitution to defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans and permanent injunctions against further violations of the federal commodities laws.
Read more about this CFTC enforcement action.
photo credit: angelocesare
