The Commodity Futures Trading Commission () has revoked the regulatory approvals of a Brazilian national and his Miami-based futures trading fund for defrauding investors out of $7.5 million.
The securities regulator said Fabio Bretas De Freitas and his company Phy Capital Investments LLC are subject to statutory disqualification from CFTC registrations as Commodity Pool Operator and Commodity Trading Advisor.
The watchdog’s decision came after a thorough investigation carried out upon Fabio’s actvities, which brought the discovery of a number of regulatory breaches. The licenses were also withdrawn after Fabio pleaded guilty to one count of conspiracy to commit wire fraud and commodities fraud, which carries a maximum 25-year prison sentence.
The Phy Capital and Bretas solicited about $7.5 million from investors through several companies in the Miami area. He defrauded at least 17 victims by touting his prolific ability to profit from his futures market trading strategies while, in fact, he did minimal trading for his investors.
While the funds were supposedly going to investments in a variety of commodities, Bretas misappropriated the money to cover his own personal expenses and also made transfers of more than $5.5 million in cash abroad.
“Puri also found that Bretas is subject to disqualification from CFTC registration based on his conviction for conspiracy to commit commodities fraud and wire fraud in connection with the same activities, as entered by the U.S. District Court for the Southern District of New York on February 28, 2020,” the CFTC stated.
Prosecutors say Bretas also created a series of false financial statements and even attempted to deceive federal regulators by impersonating a victim-investor through the use of a fraudulent email account. When the US regulators started an audit of his companies, he tried to trick them through the fake email account that he used communicate with the Commodity Futures Trading Commission and the .
Court documents show that under his plea deal, the 54-year-old agreed to forfeit nearly $5.4 million to the U.S. government and was ordered by a court to pay more than $17.2 million in monetary relief. His convictions involved the two investment companies he managed; Phynance Capital Management LLC and Absolute Experience LLC.