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HMO vs PPO Health Insurance Plan: What’s the Difference?

Written by Ricky Nave in Insurance Buyer Guide

My great grandparents showing their youthful spirits with funny bobble-heads on their 70th anniversary
My great grandparents on their 70th anniversary

Health insurance plans are often categorized into HMO plans and PPO plans, but what is the difference between these two types of plans?

HMO plans tend to have lower costs and no need to file claims but also strict requirements to use in-network care providers and to get primary care doctor referrals to see specialists, whereas PPO plans tend to have higher costs and a need to file claims but also the ability to use out-of-network providers and to see specialists without referrals.

The differences and similarities are compared in a bit more detail in the table below.

Health
maintenance
organization
(HMO)		Preferred
provider
organization
(PPO)
Monthly premiumsTypically lowerTypically higher
Copay & coinsuranceTypically lowerTypically higher
Referral requirementsTypically you are required to have a primary care doctor that coordinates all of your healthcare services and provides referrals before you can see any specialist.Typically you don’t need to have a primary care doctor and are free to have any healthcare service without a referral.
In-network vs Out-of-network
Providers		HMOs don’t typically cover any out-of-network care except for true medical emergencies.PPOs often provide some coverage for out-of-network providers, albeit usually with a higher copay and/or coinsurance and a separate deductible.
Will you need to file claims?No. Since HMOs operate almost entirely in-network, it’s unlikely you’ll ever need to file a claim since your insurance company pays the provider directly.Yes. In some cases (especially for out-of-network providers), you’ll need to pay the provider yourself and then file a claim to be reimbursed.
Dental coverageAvailable in some plansAvailable in some plans
Vision coverageAvailable in some plansAvailable in some plans

Which plan is right for you?

Ultimately, PPO plans offer more freedom and flexibility but with higher costs in the form of premiums, copay, and coinsurance. If you spend significant time in multiple places or have at least one condition that is likely to require you to visit specialists with an above-average frequency, then the flexibility of a PPO plan may be worth paying for. On the other hand, if you expect to live in the same area for the next year and don’t frequently visit specialist doctors, then an HMO plan might be the better value for your life situation.

You can peruse various options for individual and family healthcare plans on healthcare.gov’s marketplace.

Is It Safe to Share Your Cash App Tag?

Written by Ricky Nave in Individual Finance

My cash tag is shown on Cash App's home screen.
My $Cashtag shown on my Cash App home screen

A $Cashtag (sometimes just called a cash tag or cash app tag) is a unique identifier for an individual or business using Cash App. Is it safe to share your cash tag with strangers though?

Unlike a bank account number, it is 100% safe to share your cash app tag with strangers online. Cash App is designed so that both your cash tag and your cash tag URL (https://cash.app/$yourcashtag) can be shared online without compromising your security.

In fact, the sole purpose of a cash tag is to be shared with others. However, while a stranger will not be able to hack your account or steal your money with only your cash tag, they can use your cash tag to request money from you. For that reason, always verify that you know what a cash app payment request is for before you pay it. There are four common scams that people may use when requesting money from you.

  1. Someone claims to be from cash app customer service, says there is some sort of problem with your account, and asks you to verify your account by sending a small payment. THIS IS FAKE. No one who actually works for Square (the company that owns Cash App) will EVER ask you to send a payment to them to verify anything.
  2. Someone says they will send you money if you first send them a smaller amount of money to verify you are a real person. This is one of the oldest scams in the book. The scammer will take your small payment and never send you the money they promised.
  3. Someone asks you to pay for something in advance (e.g. a puppy from the next litter). Most payments made with Cash App are instantaneous and irreversible which means if you pay a stranger for something you haven’t received yet, they can then take your money and disappear without ever giving you what was promised.
  4. Impersonation scam. In this scam, someone creates a Cash App profile with a picture of either a celebrity or someone in your own life and then requests a payment from you while pretending to be this other person. To avoid being scammed by this, make sure you actually know the other person, verify that their name, cashtag, email, or phone number (whichever is being used to request a payment from you) is correct and doesn’t have some weird typo slipped into it, and verify that the payment is actually for something real.

In general, the way to avoid all of these types of scams is just to ensure that before you make any payment, you verify that you know the person you are paying and that you know what the payment is for. As long as you take those precautions, you can share your cash app tag without anxiety (the cash tag shown in the photo above is my real cash tag).

Is It Safe to Share Your Ethereum Address?

Written by Ricky Nave in Crypto

Every Ethereum account has two key pieces of information: a private key (sometimes represented as a 12-word seed phrase) and an address (sometimes also called a public address, ETH address, or wallet address). The private key essentially serves the role of a password to access the account and send cryptocurrency to other accounts. Your private key should NEVER be shared with anyone for any reason whatsoever. But what about your address? Is it safe to share your Ethereum address?

Yes, it is completely safe to share your Ethereum address with anyone. You can even share your Ethereum address with the entire internet by posting it on social media without any risk of Ethereum account hacks.

In fact, Ethereum was cryptographically designed so that unlike a bank account number, an Ethereum address can be shared without any risk to the account. This security is built into the Ethereum blockchain which means it holds true regardless of whether you use Metamask, Trust Wallet, or any other software or hardware wallet.

7 Options to Finance Buying a Small Business

Written by Ricky Nave in Business Fundraising

So you want to buy a small business, but you don’t have the money? Don’t worry — there are ways to buy a business that don’t require having all the money upfront, just like there are ways to buy a house or a car without having all the money upfront.

However, financing the purchase of a business isn’t like financing the purchase of a car. Vehicle loans are commoditized to the point where you can pretty much walk into any car dealership, tell them your income, give them permission to pull your credit report, and then walk out with the keys an hour later. Business loans are not like that, and for multiple reasons.

Firstly, every business is unique. That means lenders will generally want to do a lot more situation-specific due diligence before they agree to give you money to buy a particular business.

Secondly (and often non-intuitively for the first-time business purchaser), the word “purchase” has two distinctly different legal meanings when it comes to purchasing a business. The first meaning is called an “asset purchase”, which essentially means you will set up your own LLC or corporation which will then purchase all the assets of the existing business. The second meaning is called an “equity purchase” which means you will directly purchase the equity (i.e. the stock of a corporation or the interest units of an LLC) of the existing business. Depending on whether you buy a business with an “asset purchase” or an “equity purchase” will affect whether some lenders will finance the deal or not.

In this article, I’ll go through seven different options to finance the purchase of a small business: SBA standard 7(a) loans, SBA 7(a) international trade loans, SBA 504 loans, CDFI loans, personal loans, bank loans, and seller financing.

1. SBA Standard 7(a) Loan

An SBA 7(a) loan is a type of loan which is provided by a normal financial institution such as a bank or online SBA lender but which usually has a lower interest rate than other types of business loans since the lender’s risk is mostly covered by a government guarantee. Do note that the guarantee does not directly help you the borrower, only the lender, but it does have the indirect effect of getting you a better interest rate and more likely acceptance of your application.

The SBA 7(a) loan is the most flexible loan of anything the SBA offers. You can get up to $5 million for a business acquisition, and that acquisition is allowed to be either an asset purchase or an equity purchase. You can even use a 7(a) loan to open a new franchisee business as long as the franchisor is listed in the SBA approved franchise directory. You can even get 7(a) financing for a combination of items including buying the business itself as well as inventory (which isn’t typically included in the sale of a small business), and working capital. However, there are a few rules you’ll need to follow in order to use this financing option.

Full Ownership Rule:

The borrower(s) must own 100% of the business after the transaction. The SBA 7(a) program does not lend to any person or group looking to only buy and own a portion of a business. If you already own 50% of a business and want to purchase the other 50%, then the SBA will help you do that, but if you just want to purchase a 50% stake in an existing business, then you’ll have to look outside of SBA options to find financing.

Required Down Payment Rules:

If you are purchasing a business in which you currently have no ownership stake, then you’ll need to put up 10% of the total purchase price & transaction costs. The SBA calls that money an “equity injection”, but it’s pretty much exactly the same as a down payment on a house or car. The seller can cover up to 50% of this equity injection via a loan from the seller to the buyer, but only if that seller debt is fully subordinated to the SBA 7(a) loan.

If you are purchasing a business in which (1) you already have an ownership stake, (2) your ownership stake has not decreased in the past 24 months, (3) you have been actively involved in the business for the past 24 months, and (4) the business balance sheets for the current quarter and most recently completed fiscal year both show a debt-to-worth ratio of no higher than 9:1, then your lender has the ability to reduce or waive the 10% down payment requirement. (Note: this is lender-specific, so if you satisfy each of the four requirements, you may need to shop around for a lender that actually reduces or waives the requirement).

Business Valuation: Internal vs Third-Party Rule

If the amount being financed exceeds $250,000, or if there is a close relationship between the buyer and seller (e.g. they are family members, business partners, or close friends), then the SBA requires a third-party valuation in order to provide 7(a) financing. However, if the transaction amount is less than a quarter million dollars, and the seller and buyer were not closely connected before the transaction, then generally the SBA does not require any third-party valuation of the business before providing financing.

Restrictions

The following types of businesses are generally ineligible from being financed with SBA 7(a) loans:

  • Businesses involved in lending (e.g. loan packagers, hard money lenders, banks, finance companies, and leasing companies)
  • Insurance companies (not agents, but the companies actually underwriting the risk)
  • Investment or trading companies
  • Investment funds
  • Any business whose “stock in trade” is money
  • Pyramid sales plans, regardless of the type of product espoused
  • Gambling businesses (e.g. casinos, online gambling websites)
  • Religious organizations
  • Dealers of rare coins and stamps
  • Cannabis businesses
  • Any motel that permits prostitution

You can find additional information about eligibility and how to apply for 7(a) loans on the SBA’s 7(a) Program Info Page.

2. SBA 7(a) International Trade Loan (ITL)

The SBA offers a variation of the 7(a) loan called a 7(a) International Trade Loan (ITL). The terms for this type of loan are more rigid than the terms for a standard 7(a) loan. An ITL cannot be used to buy a business via equity purchase, and it cannot be used to purchase a franchise. However, it can be used to buy certain businesses via asset purchase.

In particular, ITL program loans can be used by an existing business to buy a second business via asset purchase under certain conditions. In order to qualify, the second business’ assets must primarily be facilities and/or equipment that enables the acquiring business to create or expand its international trade.

If you have an existing business and find a second business you’d like to buy that fits that description, then the ITL program can provide up to $5 million in financing with loan maturities up to 25 years if the assets acquired include real estate or up to 10 years if the assets acquired are only equipment, inventory, and/or working capital. You can find additional information about this loan option on the SBA’s ITL fact sheet.

3. SBA 504 Loan

SBA 504 loans cannot be used to buy a business via equity purchase, but they can be used to purchase businesses via asset purchase as long as the assets purchased are some combination of long-term fixed assets, machinery, equipment, or commercial real estate that will be used directly by the acquiring business. Unlike the ITL loan, none of the assets financed can be inventory or working capital, but on the positive side, 504 loans can be used to purchase almost any type of asset-centric business rather than just businesses related to foreign trade as is necessary for ITL financing.

504 loans can be used to finance asset purchase business acquisitions up to $5 million. To qualify for 504 financing, the buyer should (1) be a u.s. business rather than an individual, (2) have a tangible net worth under $15 million, and (3) have an averaged annual net income (after federal income taxes) of less than $5 million for the prior 2 years.

SBA 504 loans are not available directly from the SBA, but only through Certified Development Companies (CDCs). You can use the SBA’s official search engine to find CDCs near you, and you can find additional loan program details from the SBA 504 Loan Info Webpage.

4. CDFI Loan (only some CDFIs will do this)

Community Development Financial Institutions (CDFIs) are some of the least well-known resources available to small businesses. There are over 1200 CDFIs across all 50 states, DC, and even Guam and Puerto Rico, and these organizations exist to provide loans, grants, and financial guidance to start-ups, small businesses, co-ops, and real estate development projects.

CDFIs vary significantly from one to another. Most lend only to businesses or individuals in particular geographical regions. Some focus on lending to women, others to minorities, others to individuals with low incomes, and others will lend to any new business within their geographic region. Some (but not all) CDFIs provide lending options that can be used by individuals. All of these differences unfortunately mean that finding a CDFI that will work with you can be a bit of a search process, but the result can be very worthwhile as some CDFIs offer loans to people with less credit and experience than other lenders require, and sometimes (but not always) the interest rates and loan terms can be better than mainstream loan options. This web tool has a very useful search engine and map to locate CDFIs near you.

Some (but not all) CDFIs provide lending options that can be used to buy a small business. I haven’t seen any CDFIs that will finance equity purchases, but many provide loans to businesses to purchase assets, and this is where the opportunity is. If you have an existing business (or can quickly form one), then your goal will be to find a CDFI near you that provides loans for acquiring assets and then using that loan to buy another business via asset purchase.

5. Personal Loan

If you are interested in buying a business for under $100k and if you personally have good credit, a steady income, and not excessive debt, then a personal loan can be an excellent financing option. With an online lender, personal loans can often be approved within a week, and the money can be in your bank account within two weeks.

There are many online lenders which should be shopped for the best rates for personal loans. A few options include Upstart (up to $50,000), Lending Club (up to $40,000), and SoFi (up to $100,000).

6. Bank Loan

Banks don’t just offer home loans — they also offer business loans. If your credit is great and you have a steady income and low debt currently, then a bank loan can be a good way to obtain a loan to purchase a business. Talk to a few banks near you to see what they can do for you. Be aware however that this is possibly the most difficult financing option on this list as banks really only want to make business acquisition loans to people who have excellent credit, income, and debt levels. Most people would be better off going with either a personal loan or an SBA loan to finance a small business acquisition.

7. Seller Financing (take EXTREME CAUTION)

Seller financing is when the current owner of a business agrees to sell you their business and to loan you part or all of the purchase price. It is sometimes the holy grail and sometimes the trojan horse of business acquisition financing.

On the one hand, seller financing can often come with competitive interest rates, little to no money down, and less stringent credit requirements than other types of business purchase loans. This means seller financing can be an incredible tool for smart business leverage. On the other hand, sometimes the owner of a crappy business will offer seller financing to incentivize suckers to buy their business, take over liability payments, and provide them with a hassle-free income stream. If the buyer is eventually unable to make payments due to the poor quality of the business, the seller will just repossess the business and sell it again to a new sucker, all while keeping the payments the first buyer made up until they defaulted. Don’t be that sucker. How?

How can you distinguish the holy grails from the trojan horses amongst all the seller-financeable businesses for sale?

The first and most critical step is to consider the seller’s motivation, both for selling and for offering seller financing. Do as much due diligence as possible into the seller’s motivations.

If the owner says they are selling because they are relocating, ask enough questions to verify whether or not they actually are. If they really are relocating, try to figure out whether they are actually selling because they want to relocate or whether they are both selling and relocating because they couldn’t make their business work.

If the owner says they are selling to pursue other opportunities, then realize that the seller perceives the business they are selling as an opportunity not worth pursuing. If that’s the case for the seller, think very carefully about whether it’s an opportunity worth pursuing for you. In general, the answer should be no in this situation unless the business has a specific sort of problem that the current owner is not well suited to solve but which you are. For example, maybe the business works great internally but has terrible marketing. If you are a marketing wizard, then maybe this would be a good opportunity for you.

If the owner says they are selling to retire, then realize that the business is not currently in a state in which management can be outsourced. If the owner must sell a business to retire, then the owner is also a critical employee who hasn’t done a good job recruiting other people who can take over, otherwise they’d likely just keep the business as a passive revenue stream. The fact that they must sell means you’d be buying a job as much as you’d be buying a business.

Another important factor that can help you separate the holy grails from the trojan horses is where you sourced this acquisition opportunity. You should be equipped with the knowledge that most business brokers feed sellers unrealistic expectations regarding the fundamental value of their businesses, which means if you found a business for sale through a broker, it more than likely is overpriced and will be difficult to buy at a price that is actually advantageous to you. Furthermore, if a business is listed for sale with a broker AND is advertised as having seller financing available without you needing to specifically ask about it, then the seller is probably desperate to sell, which means the business most likely has some serious issues.

Oddly enough, one of the best ways to source good businesses to buy is to target businesses that are not actually listed for sale but which are having some problems you have the expertise to solve. There are three challenges you must overcome to make this work.

  1. You must find businesses that have some sort of problems but which aren’t listed for sale. This can difficult since the problems are often not apparent from the outside.
  2. You must convince the business owner to sell the business.
  3. You must convince the business owner to provide seller financing.

A great strategy to overcome all of these challenges at once is to have a B2B consulting business. Your consulting business clients will be the start of your business acquisition funnel. Clients will come to you with exactly the type of business problems you have consulting expertise with, which solves the first challenge. You can then negotiate terms that include equity compensation as payment to help them solve one of their problems. For example, you may ask for a 20% stake in their company contingent upon you helping them solve some serious problem in their business. If the problem is significant, the owner will likely accept this offer which gets your foot in the door for the second challenge.

After solving that first problem, if the business has other problems, you can ask the owner if they would be willing to sell you the rest of their company under a seller financing agreement. By solving one of their problems already, you have demonstrated your competence which means the owner now has reason to believe that you would be a good custodian of their business, that you could solve the remaining problems, and that you wouldn’t crash the business into the ground before they had received their full payout. Also, as someone who already owns equity in the business, you already have skin in the game which makes you more trustworthy as a business partner.

Is it Safe to Share Your Venmo on Social Media?

Written by Ricky Nave in Finance

You need two pieces of information to access a Venmo account. The first piece of information is a username, phone number, or email address (any of them can be used). The second piece of information is a password. So is sharing your Venmo username on social media safe?

As long as you have a long, strong password that you don’t share with anyone, then sharing your Venmo username online is perfectly safe and poses no hacking risk to your Venmo account. In fact, you have to share your Venmo username or a linked phone number or email address in order for anyone to ever send you a payment.

HOWEVER, the same information that is needed by someone to send you a payment can also be used by someone to request a payment, so make sure you know that any payment request you receive is from someone you actually know before paying it.

10 Commodity Pool Operator Registration Violation Cases

Written by Ricky Nave in Investment Fund Law & Regulation

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