CFTC: Florida Men Operated Sham Commodity Pool

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.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.