CFTC Secures $4.5M Default Ruling in Investor Fraud Case Against STA Opus
The US Commodity Futures Trading Commission was able to get a default judgment that orders Gerard Suite and his STA Opus to pay over $1.1M in restitution and almost $3.4M in penalties for an alleged commodity pool fraud. Another defendant, Frank Collins, agreed to pay a $50K penalty and $50K in restitution over allegations that he misappropriated at least $50K from investors.
According to court filings, from 2013 through July 2016, Suite marketed an STA Opus commodity pool that touted yearly returns of 57% to almost 133% despite that nearly all of the money traded was lost. The CFTC said that Suite concealed the losses by sending investors bogus account statements.
The investors were purportedly told that they could invest even more if they sent over personal checks that were voided. Suite allegedly used the routing and account information to get new checks. This made it possible for his company to make withdrawals that were not authorized from the account of at least one customer.
The CFTC said that Suite raised over $1.6M from at least 30 investors, with just part of that going toward bad trades. About $1.25 allegedly was pocketed by defendants. Meantime, Suite is accused of hiding previous fraud allegations. This included that in 2012, the state of California ordered him to pay $2.5M for violating an earlier order prohibiting him from selling securities without getting the proper authorization.
Last year, the Federal Bureau of Investigations arrested Suite, who was indicted for mail fraud. He pleaded guilty to the criminal charges against him.
Draven LLC and Owner Must Pay More than $2.2M in Penalties and Restitution
A district court judge has ordered Derek Springfield and his Draven LLC to pay more than $2.2M for fraudulently soliciting and receiving at least $1.8M from about 112 commodity pool participants related to pooled investments in forex and commodity futures. Nearly $1.5M is restitution to customers. $800K is a civil monetary penalty.
The Consent Order accused the defendants of fraudulent sales practices, misappropriation of participants’ monies, and providing participants with account statements that were false.
The Defendants are accused of telling prospective pool participants that their money would be put in segregated accounts and traded for them by experienced trades who knew how to make returns when, in truth, stated the regulator, the defendants placed participants’ money in two different commodity pools, traded just a small sum of the money, and rendered net losses of almost $196K. Meantime, pool participants were charged 10% in management fees that were determined by profits, even though there were net losses.
The defendants are accused of using some of the funds of pool participants to cover company expenses, Springfield’s own expenses, as well as client withdrawal requests. False statements were allegedly sent to pool participants to conceal losses and misappropriations. The defendants allegedly ran a Ponzi-style scam that involved using participants’ monies to pay other participants’ returns.
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Deutsche Bank Agrees to Pay $220M to Resolve Libor Rigging Probe, Institutional Investor Securities Blog, October 26, 2017