The CFTC has simultaneously filed and settled charges against Robert S. Moss, an unregistered commodity pool operator (“CPO”) accused of commodity pool solicitation fraud and misappropriation. The North Carolina resident has been ordered to pay over $2 million in restitution and penalties.
According to the CFTC, between 2001 and 2008 Moss solicited upwards of $3 million from 22 individuals purported to trade commodity futures in a pool. Not only was Moss never registered with the CFTC or NFA as a CPO, he misrepresented his past trading performance to potential investors. He would solicit participants via a one-page letter, in which he claimed (1) he had not lost money trading since 1993, (2) his annual returns were 22-41%, (3) no participant had ever lost capital, (4) his liquid assets were over three times the size of his trading account. All of these claims were false. Moss would also provided new participants with promissory note guaranteeing them either 16-19% returns or variable rates based on his own profitability.
After Moss received participants’ funds, he would deposit them into his personal bank account. Some of those funds were traded in his name with various futures commission merchants (FCMs), but half went to the CPO’s personal expenses, and to make Ponzi payments to other pool investors. The funds actually traded in the commodity pool sustained significant losses, but Moss issued false statements to investors in order to keep his scheme alive. Finally, in February 2009, he issued a letter informing participants that he would not be able to make their interest payments or return their funds. Of the $1.5 million he owed, he only had $177,000.
In addition to restitution and penalty, Moss is banned from any commodity-trading related activity, including seeking registration as a CPO or another other entity with the CFTC.