Wednesday, October 28, 2020

Miami based investment firm fined $17.2 million in a commodities fraud scheme


The U.S. Commodity Futures Trading Commission announced a default judgment was entered on October 3rd against defendants Fabio Bretas de Freitas, of Miami, Florida, and Phy Capital Investments LLC, a registered commodity pool operator and commodity trading advisor, for fraud and misappropriation of client funds.

The judgment orders the defendants to pay a civil monetary penalty of $12,608,982, to pay $4,625,166 in restitution and prejudgment interest to Phy Capital clients, to disgorge $5,752,042 in ill-gotten gains, and permanently bans the defendants from trading in CFTC-regulated markets.  The Honorable Jesse M. Furman of the U.S. District Court for the Southern District of New York entered the judgment.

The order resolves a CFTC enforcement case filed on May 9, 2019, charging the defendants with fraud and misappropriation in connection with commodity futures trading.  Bretas was also charged with making false statements to the National Futures Association (NFA), the self-regulatory organization for the U.S. derivatives industry.  [See CFTC Press Release 7927-19]

The order finds that from at least March 2016 through May 2019, the defendants 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.

- Advertisement -

According to the order, however, only $155,000 of the $6,894,979 in client funds received by the defendants was ever put into any trading accounts and the balance was either misappropriated for non-trading uses or returned to other clients in a manner akin to a Ponzi scheme.

The court also found Bretas misrepresented to NFA that one of the defendants’ commodity pools was a private equity fund created to develop intellectual property sold to other businesses.  Bretas was also found to have set up a fictitious email account to mislead NFA staff into believing they were communicating with a purported lender to the pool.

In a related criminal case in the U.S. District Court for the Southern District of New York, Bretas awaits sentencing after having pleaded guilty on August 8, 2019, to charges of conspiracy to commit wire fraud and commodities fraud.  [See Case No. S3 19 Cr. 257 (LTS)]

The CFTC cautions victims that restitution orders may not result in the recovery of money lost, because wrongdoers may not have sufficient funds or assets.  The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

- Advertisement -

The CFTC appreciates the assistance of NFA, the Money Laundering and Transnational Criminal Enterprises Unit of the United States Attorney’s Office for the Southern District of New York, the New York Division of the Federal Bureau of Investigation, and the Comissão de Valores Mobiliários of Brazil.

The Division of Enforcement staff members responsible for this case are Elizabeth M. Streit, Joy McCormack, Scott R. Williamson, Matthew Edelstein, and Stacie Pan.


CFTC’s Commodity Pool Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories providing the warning signs of fraud, including the Commodity Pool Fraud Advisory, which puts a spotlight on a type of fraud involving individuals and firms, often unregistered, offering investments in commodity pools.

Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.

Source: CFTC


Nigerian court declines to issue international arrest warrant for fugitive ex-Petroleum Minister in corruption case

The Abuja Division of the Federal High Court, on Wednesday, refused an application by the Economic and Financial Crimes Commission, EFCC, for an arrest...

South Korea’s former Vice Justice Minister sentenced to jail for bribery and sexual favors

Former Vice Justice Minister Kim Hak-eui, the figure at the center of one of Korea’s biggest political sex scandals, was placed under pretrial detention...

Beam Suntory Inc. fined $19.6 million in foreign bribery case

Beam Suntory Inc. (Beam), a Chicago-based company that produces and sells distilled beverages, has agreed to pay a criminal monetary penalty of $19,572,885 to...

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Subscribe For More

Get our daily notification on the latest financial crimes news around the World


Latest News

This Week

Guatemala seeks arrest of ex-minister linked to a $16m cash discovery

Guatemalan prosecutors are seeking the arrest of the former communications minister for ex-President Jimmy Morales on money laundering charges after finding a connection to...

Goldman Sachs agrees $3 billion settlement with US DoJ over 1MDB corruption scandal

Goldman Sachs has agreed to pay nearly $3bn (£2.3bn) in the US to end a probe of its role in Malaysia's 1MDB corruption scandal. The...

Texas AG Ken Paxton fires second whistleblower who accused him of bribery

A second whistleblower has been fired from the Texas attorney general’s office after reporting his boss, Texas Attorney General Ken Paxton, to law enforcement for...

Swiss court upholds money-laundering conviction of ex-Ukrainian lawmaker Martynenko

A Swiss court has upheld the conviction of former Ukrainian lawmaker Mykola Martynenko for laundering via Swiss banks millions of dollars worth of kickbacks...

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks