Monday, 26 September 2016
Last updated 10 min ago
Jan 8 2009 | 1:08pm ET
It’s a couple of orders of magnitude smaller than that of Bernard Madoff, but the Commodity Futures Trading Commission has shed light on another alleged Ponzi scheme, this one involving dozens of investors.
Joseph Forte of Philadelphia has been charged with soliciting approximately $50 million from dozens of individuals and entities to participate in a commodity futures pool to trade, among other things, Standard & Poor’s 500 Index, foreign currency and metal futures. Forte claimed he was a successful commodity futures trader and that his pool had a successful track record.
However, according to the CFTC, he was neither successfully trading nor making an effort to do so. During a 34-month period from 2004 into 2007, Forte allegedly did little to no trading at all and failed to deposit any funds into the trading account during a 53-month period from October 2002 to February 2007. When trading, he purportedly sustained net losses of at least $3 million trading almost exclusively the S&P500 futures contract.
From the outset, Forte also paid himself management and incentive fees based on the falsified earnings and increased value of the pool, the CFTC charged. While Forte reportedly acknowledged to taking $10 to $12 million of the solicited funds, information in the falsified account statements would suggest receipt of management and incentive fees totaling more than $28 million.
According to federal authorities, Forte confessed in the wake of the scheme’s collapse.