The Commodity Futures Trading Commission (CFTC) took a civil enforcement action against a firm for allegedly operating a commodity pool scheme.
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The legal action was filed in the U.S. District Court for the Eastern District of Louisiana against NOLA FX Capital Management and Meteor, LLC, as well as the founder of both, Michael B. DePetrillo.
The CFTC complaint alleges the defendants operated a commodity pool scheme where they fraudulently solicited and accepted at least $7.6 million from at least 40 individuals and then misappropriated and commingled pool participant funds. Allegedly, NOLA FX Capital and Meteor acted as unregistered commodity pool operators, while DePetrillo acted as an unregistered associated person of a commodity pool operator.
The defendants allegedly sent false account statements to pool participants showing purported profits and trading activity, when none existed. Instead of trading as promised, the defendants misappropriated pool funds. The misappropriated funds were allegedly used to make payments to existing pool participants in a manner akin to a Ponzi scheme, pay DePetrillo’s personal expenses, and to conduct personal trading in DePetrillo’s personal trading accounts.
The CFTC is seeking restitution, disgorgement, civil monetary penalties, restitution, trading and registration bans, and a permanent injunction against further violations.
The U.S. Attorney’s Office, Eastern District of Louisiana, filed a separate criminal action against Michael B. DePetrillo.