Thursday, 29 January 2015
Last updated 19 min ago
Apr 7 2009 | 12:33pm ET
The U.S. Commodity Futures Trading Commission has charged three Florida men with operating a fraudulent commodity scheme involving about 100 investors and some $17 million that they claimed was being invested in foreign currency futures and options.
The trio of Donovan Davis, Blayne Davis and Damien Bromfield allegedly told prospective investors that their funds would be pooled in the CBM FX Fund, a commodity pool established by Capital Blu. Rather than pool investor funds, the defendants split the funds into trading of both off-exchange and on-exchange forex futures and off-exchange forex options.
In addition, the defendants allegedly deposited millions of dollars into multiple Capital Blu bank accounts, where funds were commingled and misappropriated for personal use, including luxury automobiles, private jet charters and, a two-night $40,000 spree at a gentlemen’s club.
Ultimately, of the $17 million solicited, $7 million was allegedly lost in trading, and millions of dollars remain unaccounted for.
To hide their fraud, the complaint alleges, the three defendants provided investors with phony account statements misrepresenting the earnings in their accounts by showing consistent monthly profits as high as 7% for 12 straight months (September 2007 through August 2008). In fact, the defendants’ actual trading allegedly resulted in net losses every month.
The CFTC is seeking restitution, disgorgement of ill-gotten gains, civil monetary penalties, and permanent injunctions against further trading from the defendants.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…