Pennsylvania Resident Charged by CFTC with Defrauding 4 People of $825,000

The US Commodity Futures Trading Commission charged William H. Powderly IV with fraudulently soliciting four investors. According to an official announcement made by the regulator, the individual that is a resident of New Hope, Pennsylvania defrauded his victims with at least
$825,000.

Mr Powderly claimed to the individuals that he will use the funds to place trades on the commodities futures markets. To encourage his victims to entrust him with the funds, he stated that he’s been working with a university professor on a trading system. The funds were deposited to an account on his own personal name.

The scheme is said to have taken place between January and October 2016. During the period Powderly has been providing his clients with false account statements and was misleading them into believing that they didn’t lose their funds.

Customers of the services that were allegedly provided by Powderly were misled into believing that the commodity futures trading program was extensively backtested. His claims were that the system did not generate a single day of losses and delivered consistent returns.

This is the place to mention that such claims are typically a red flag for investors. Notoriously famous fraudster Bernard Madoff claimed to his investors that he can generate a consistent return of 7 percent. While a number of investment banks have been reporting quarters when they didn’t have a single day of trading losses, they are typically making markets in a variety of asset classes.

Without having the advantage of making markets, a trader would be struggling to deliver a system that doesn’t generate any losses.

Throughout the period, Powderly in fact was consistently losing money and failed to inform his investors about his misfortune on the commodity futures market. The CFTC states that he marked losses every single month between January and October 2016 and tried to cover those up by distributing false account statements.

The CFTC will be seeking full restitution for the clients and disgorgement of ill-gotten gains.