An Illinois court has granted the US Commodity Futures Trading Commission’s motion for a default judgment against a Pennsylvania man who solicited money by falsely claiming he had created a successful commodity futures program.
The CFTC accused of soliciting over $1.30 million from customers to trade commodities in an account under his name, and falsely told customers he had devised a commodity futures trading program that generated exceptional profits.
According to the CFTC, however, he experienced consistent losses and covered his fraud by making fabricated statements and creating false account statements. He also utilized promotional materials that showed trading returns based on hypothetical results, without including the required disclosure language.
As a result, at least seven participants gave Powderly a total of $1,278,000 to trade in his personal commodity futures accounts held at Futures Commission Merchants. He lost most of his clients’ funds and raked in more than $250,000 in fees over a 10-month period.
The order also finds that the defendant accepted clients’ trades and funds and therefore acted as Eligible Contract Participants (ECPs), without registering as such with the CFTC.
The that Powderly had been ordered to pay nearly $1.1 million in penalties. The orders also imposed lifetime trading, solicitation and against Powderly and “permanently enjoins him from future violations of the Commodity Exchange Act and CFTC Regulations,” the CFTC said.
According to the complaint, the fraud scheme began in January 2016 and continued through October 2016.
The agency further explains: “The Consent Order found that Powderly falsely represented to customers and prospective customers that he and a university professor had developed a commodity futures trading program that generated exceptional hypothetical trading results and that “beta” testing of this system generated consistent gains without a single day of loss.”
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