1. Denari Capital, LLC
Case Summary: Travis Capson of Utah and Arnab Sarkar of California operated their California-based company Denari Capital, LLC. From at least August 2012 until December 2019, Capson and Sarkar fraudulently solicited participants to invest with Denari, misrepresenting the past profitability of Denair’s forex trading and issuing false account statements to participants that misrepresented the profitability of their respective interests in the pool. They also failed to receive pool funds in the pool’s name, improperly commingled pool funds, failed to provide required commodity pool disclosures, and failed to register with the CFTC. In addition, during an examination with the NFA in July 2019, Capson made false representations that Denari had been trading forex with proprietary funds since 2015 and that Denari did not trade forex for third parties until 2019.
Charges: Engaging in a foreign exchange (forex) pool fraud, failing to register with the CFTC as a CPO and associated persons, and (for Travis Capson only) misrepresenting Denari’s activities to the NFA
Penalties: $250,000 civil monetary penalty for Capson, $166,000 civil monetary penalty for Sarkar, $3,663,282 restitution by Denari to victims, permanent registration bans, and five-year trading bans.
CFTC release November 29, 2021 Press Release
2. Cody Malosi Wilson
Case Summary: From approximately August 2015 to October 2018, Cody Malosi Wilson operated commodity pools under various names. He used interstate commerce to operate the pools and solicit and accept funds from pool participants, but failed to register as a CPO as required. He also violated CFTC regulations by receiving funds from pool participants via accounts in his name, commingling pool funds with his own property, and failing to operate each commodity pool as a separate legal entity from himself.
Charges: Failing to register as a CPO and failing to comply with CFTC regulations regarding CPOs
Penalty: $150,000 civil monetary penalty
CFTC release: August 26, 2021 Press Release
3. Negus Capital Incorporated
Case Summary: Aaron Butler owned and operated Negus Capital Incorporated (NCI) based in Alabama. From March 16, 2017 until February 21, 2018, NCI, through Butler, engaged in an unlawful binary options trading scheme. NCI and Butler misrepresented how customer funds would be pooled or separated, how the funds would be organized into accounts, and how the accounts would be managed and traded. In reality, rather than trade customer funds as promised, NCI instead misappropriated most if not all of the funds for Butler’s personal benefit, including spending tens of thousands of dollars on jewelry, Apple store purchases, and Toys R Us gift cards.
Charges: Fraudulent solicitation of investor funds, misappropriation of investor funds, and operation as an unregistered commodity pool operator (CPO) and an unregistered commodity trading advisor (CTA) for at least 70 members of the public.
Penalties: $294,545 in restitution to defrauded customers, a civil monetary penalty of $883,635, and permanent registration and trading bans
CFTC releases (several): April 7, 2021 Press Release, June 17, 2020 Press Release, and November 4, 2019 Press Release
4. Vertex Holdings Limited
Case Summary: Allegedly founded in Russia, Vertex Holdings Limited falsely claimed on its website that it is a Corporate Authorized Representative of its prime broker and that its prime broker is regulated by the NFA, and the website provided an NFA ID for the purported prime broker. However, the NFA ID does not belong to any member of the NFA, but rather to an entity that notified NFA that it operated an exempt commodity pool for which the claim of exemption was withdrawn earlier in 2020.
Charges: False or misleading claims of NFA registration or licensure
CFTC release: September 1, 2020 Press Release
5. United Financial Limited
Case Summary: Allegedly located in California, United Financial falsely claimed on its website that it is “authorized and regulated by the NFA” and lists an NFA ID. However, the NFA ID does not correspond to any current or past member of the NFA but rather to an entity of the same name which notified the NFA that it operated an exempt commodity pool, but for which the claim of exemption was withdrawn earlier in the year.
Charges: False or misleading claims of NFA registration or licensure
CFTC release: September 1, 2020 Press Release
6. DST Clouds International Limited
Case Summary: Allegedly located in the United Kingdom at a nonexistent address, DST Clouds International falsely claimed to be “authorized and regulated by the NFA” and provided an NFA ID. However, like with Vertex Holdings and United Financial, the NFA ID only corresponded to an entity that notified the NFA that it operated an exempt commodity pool, but for which the claim of exemption was withdrawn earlier in the year.
Charges: False or misleading claims of NFA registration or licensure
CFTC release: September 1, 2020 Press Release
7. Lighthouse Futures Ltd.
Case Summary: Craig Clavin and his company Lighthouse Futures, Ltd. both operated out of New York. From 2015 until 2019, Clavin and Lighthouse fraudulently solicited commodity pool participants, raising and misappropriating at least $345,000 from U.S. residents for pooled investments in commodity futures contracts. However, they failed to trade the vast majority of the funds and instead misappropriated most of the money for personal use. The misappropriation was concealed by sending false performance reports and account statements to pool participants.
To entice prospective pool participants, Clavin and Lighthouse represented that they were running a successful commodity pool, that the pool would participate in the commodities markets, that the pool was exempt from registration with the CFTC, and that upon request pool participants could withdraw the funds they had deposited and their purported profits at the end of any given year. In actuality, the funds were mostly misappropriated and payouts were done in a Ponzi scheme fashion.
Charges: Lighthouse illegally operated as an unregistered commodity pool operator by fraudulently soliciting and receiving funds for a pooled commodity futures investment vehicle, and Clavin acted as an unregistered associated person of Lighthouse, which Lighthouse unlawfully allowed Clavin to do. Misappropriation of funds is another charge.
CFTC release: June 11, 2020 Press Release
8. Phy Capital Investments, LLC
Case Summary: Phy Capital Investments, LLC is a registered commodity pool operator with its principal place of business in Miami, and its CEO and registered associated person Fabio Bretas de Freitas is a current or former resident of Miami. From at least March 2016 through May 2019, Phy Capital and Fabio fraudulently solicited clients and prospective clients to trade commodity interests by claiming they had developed proprietary software called SoPhyA which achieved profits of 49 percent on futures trading from February 2016 through November 2017 for one of their commodity pools. Phy Capital received almost $6.9 million in client funds, but only $155,000 was ever put into any trading accounts while the balance was either misappropriated for personal use by Bretas or used to pay out to other clients in a Ponzi scheme fashion.
In addition, Bretas misrepresented to the NFA that one of Phy Capital’s commodity pools was actually a private equity fund created to develop intellectual property sold to other businesses. Bretas even set up a fictitious email account to mislead NFA staff into believing they were communicating with a purported lender to the pool.
Later on May 8, 2020, the CFTC filed a notice of intent to revoke registration of Phy Capital and Bretas due to statutory disqualifications arising from a 2019 New York order against PCI and Bretas for the previously mentioned violations.
CFTC penalties: payment of $4,625,166 in restitution and prejudgement interest to Phy Capital clients, disgorgement of $5,752,042 in ill-gotten gains, a civil monetary penalty of $12,608,982, and permanent bans on Phy Capital and Bretas from trading in CFTC-regulated markets.
CFTC releases: May 8, 2020 Press Release, October 15, 2019 Press Release, and May 10, 2019 Press Release
On May 9, 2019, the United States Attorney for the Southern District of New York indicted Fabio Bretas on six criminal counts of bank fraud, wire fraud, commodities fraud, conspiracy to commit wire fraud and commodities fraud, and aggravated identity theft. On August 8, 2019, Bretas pleaded guilty to charges of conspiracy to commit wire fraud and commodities fraud. You can find specific docket entry details of Bretas’ criminal case here.
9. Perfection PR Firm LLC
Case Summary: Joshua Christian McDonald operated his company Perfection PR Firm LLC (PPR) out of California and Tennessee. McDonald and PPR solicited fraudulently solicited funds totaling at least $440,000 from at least 12 investors, including multiple residents of Missouri, by falsely representing to prospective investors that returns would grow between 10% and 50% in value per month. In reality, McDonald misappropriated some funds and lost money trading on remaining funds. In addition, McDonald and PPR pooled investors’ funds in bank and trading accounts in their own names, and PPR acted as an unregistered commodity pool operator with McDonald as an unregistered associated person.
CFTC Charges: Misappropriation of investor funds, fraudulent solicitation of investor funds, unlawfully accepting investor funds in the names of McDonald and PPR, unlawful operation of PPR as an unregistered commodity pool operator, and unlawful action of McDonald as an associated person of PPR
CFTC release: February 14, 2020 Press Release
On January 29, 2020, the United States Attorney for the Eastern District of Missouri indicted McDonald on four criminal counts of wire fraud.
10. Main & Prospect Capital, LLC
Case Summary: Daniel Adam Hewko and his father Daniel Hewko operated their company Main & Prospect Capital, LLC based in California. From at least 2014 through 2019, the two men and their company received more than $2.3 million from at least 19 investors for the purpose of investing in a pooled investment vehicle operated by Main & Prospect Capital and marketed as the Global Opportunity Fund. The fund was marketed as a vehicle that would trade various financial instruments including stocks, commodities, and foreign currency. However, most of the money was misappropriated. When investors attempted to withdraw their funds, the elder Daniel Hewko attempted to cover up the wrongdoing by falsely telling investors that their money was locked up in trade positions or locked up due to the CFTC’s investigation, all the while continuing to tell investors that the investments had been profitable.
Charges: failure to operate the commodity pool as a separate legal entity and register with the CFTC as required, failure of both individual men to register as associated persons, fraudulent solicitation, and misappropriation of funds
CFTC release: November 13, 2019 Press Release