PONZI SCHEME DEFENDANT ORDERED TO RETURN $20.6 MILLION TO VICTIMS

FROM: U.S. COMMODITY FUTURES TRADING COMMISSION

December 5, 2012

Federal Court in Idaho Orders CFTC Defendant Trigon Group, Inc. to Return More than $20.6 million of Ill-Gotten Gains to Victims of its Fraud

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Edward J. Lodge of the U.S. District Court for the District of Idaho entered a consent order of permanent injunction that requires defendant Trigon Group, Inc. (Trigon), an Idaho-based business, to disgorge more than $20.6 million of ill-gotten gains to the victims of its fraud. The consent order also imposes permanent trading and registration bans against Trigon and prohibits it from violating the anti-fraud provisions of the Commodity Exchange Act, as charged.

The consent order stems from a CFTC complaint filed on February 27, 2009, that charged the defendant Trigon as well as defendant Daren L. Palmer with solicitation fraud and misappropriation in operating a commodity pool Ponzi scheme (see CFTC Press Release 5623-09, February 27, 2009, under Related Links). Earlier, on October 4, 2010, Judge Lodge entered a summary judgment order requiring Palmer to disgorge more than $20.6 million and to pay a civil monetary penalty of more than $20.6 million. The order also permanently bars Palmer from engaging in any commodity-related activity, including trading, and from registering or seeking exemption from registration with the CFTC (see CFTC Press Release 5919-10, October 6, 2010, under Related Links).

The consent order finds that, from at least September 2000 to date of the complaint, defendants directly and indirectly solicited at least $40 million from at least 57 individuals or entities to invest in Trigon entities. Pool participants understood that their funds would be used for trading commodity futures on their behalf, among other things, S&P 500 index futures contracts. Defendants made repeated misrepresentations that the pool was profitable and growing. In fact, defendants misappropriated the vast majority of the funds invested by pool participants. The consent order also finds that the defendants violated registration requirements as charged.

The CFTC appreciates the assistance of the Securities and Exchange Commission (SEC) and the Idaho Department of Finance. The SEC filed a related action against Palmer and Trigon that also resulted in sanctions against them.

The CFTC Division of Enforcement staff members responsible for this case are Alison Wilson, John Dunfee, Mary Kaminski, A. Daniel Ullman, Paul G. Hayeck, and Joan Manley.

ALLEGED PONZI SCHEME TARGETS MEMBERS OF DEAF COMMUNITY

FROM: COMMODITY FUTURES TRADING COMMISSIOIN

CFTC Charges California Resident Marc Perlman and his company, iGlobal Strategic Management, LLC, with Solicitation Fraud and Misappropriation in Commodity Pool Ponzi Scheme

Defendants charged with fraudulently soliciting and accepting at least $670,000 from members of the public — largely persons from the deaf community

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action in the U.S. District Court for the Southern District of New York, charging Marc Perlman of Rancho Cucamonga, Calif., and his firm, iGlobal Strategic Management, LLC (iGlobal) with operating a commodity pool Ponzi scheme that fraudulently solicited and accepted at least $670,000 from at least 17 people — largely persons from the deaf community. Perlman was a principal and officer of iGlobal, and neither defendant has ever been registered with the CFTC.

Specifically, the CFTC complaint, filed on August 28, 2012, alleges that from at least March 2009 through at least November 2011, iGlobal and Perlman fraudulently solicited individuals to invest in a pooled investment vehicle to trade leveraged off-exchange foreign currency contracts (forex). Perlman furthered his and iGlobal’s fraudulent scheme by playing upon the Christian faith of certain iGlobal investors, using claims about his own faith and references to scripture to obtain the trust of certain iGlobal investors, according to the complaint.

The complaint further charges that less than half of the funds invested by the iGlobal investors, or approximately $305,000, were used to trade forex, resulting in losses that consumed nearly all of the invested funds. The rest of the funds were allegedly used for unauthorized purposes, including 1) payouts of fictitious "profits" to certain iGlobal investors, 2) cash withdrawals of funds that were not re-deposited into the iGlobal trading or bank accounts, 3) charges at department stores, electronic stores, grocery stores, and restaurants, and 4) payment of rent for Perlman’s personal residence. iGlobal and Perlman misrepresented that the iGlobal investors’ funds would be invested in forex and fraudulently omitted and/or concealed that iGlobal and Perlman used and planned to use investor funds for purposes other than forex investments, according to the complaint.

In addition, iGlobal and Perlman allegedly misrepresented that trades executed in connection with the iGlobal investments were profitable and that certain iGlobal investors were earning and were being paid, or would be paid, profits from the trading. iGlobal and Perlman also allegedly issued false written statements that reported profits and listed the respective iGlobal investors’ full principal when, in fact, more than half of the funds had been misappropriated and the trading resulted in net losses.

In its continuing litigation, the CFTC seeks restitution to defrauded investors, a return of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of federal commodities laws, as charged.

The CFTC appreciates the assistance of the U.K. Financial Services Authority.

CFTC Division of Enforcement staff members responsible for this case are Laura Martin, Christopher Giglio, Manal Sultan, Lenel Hickson, William Tylinski, Stephen Obie, and Vincent McGonagle.

MAN AND COMPANY ORDERED TO PAY RESTITUTION FOR COMMODITY POOL PONZI SCHEME FRAUD

FROM:  COMMODITY FUTURES TRADING COMMISSION
May 30, 2012
Federal Court in New Jersey Orders Victor Eugene Cilli and His Company, Progressive Investment Funds LLC, to Pay over $700,000 in Restitution and Penalty in Commodity Pool Ponzi Scheme

Cilli also pled guilty to related fraud and other criminal charges
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) has obtained a federal court consent order requiring defendants Victor Eugene Cilli and his company, Progressive Investment Funds LLC (Progressive), both formerly of Hackensack, N.J., to pay, jointly and severally, restitution of $243,000 and a $474,000 civil monetary penalty in connection with operating a commodity pool Ponzi scheme that defrauded investors of over $500,000 and misappropriated investor funds

The court’s order also finds that the defendants made false statements to the National Futures Association (NFA), failed to distribute required reports to pool participants, and failed to keep required books and records.

The consent order of permanent injunction, entered on May 29, 2012, by Judge William J. Martini, of the U.S. District Court, District of New Jersey (Newark), permanently prohibits Cilli and Progressive from engaging in any commodity-related activity, including trading, and from registering or seeking exemption from registration with the CFTC. The order also permanently prohibits the defendants from further violations of the Commodity Exchange Act and CFTC regulations, as charged.

The order finds that between September 2006 and September 2007, the defendants engaged in a Ponzi scheme and solicited $506,000 from four individuals to trade commodity futures (primarily E-mini S&P 500 futures contracts) in a pooled account. However, the defendants used only approximately $263,000 to trade futures and had net trading losses of approximately $201,168, according to the order. Instead of disclosing the losses, the defendants sent pool participants statements falsely showing trading profits. The defendants also sent two pool participants false IRS Form 1099s, which showed net profits instead of the actual net losses, the order finds. To conceal their scheme, defendants used pool participant funds to make purported profit payments to other participants, as is typical of a Ponzi scheme, the order finds.

Further, the order finds that the defendants failed to provide pool participants with quarterly and annual Net Asset Value reports, failed to retain required pool records, and falsely told the NFA that Progressive never had pool participants.

On October 3, 2011, Cilli pled guilty to criminal securities fraud (15 U.S.C. § 78j(b) and 78ff(a) and 18 U.S.C. § 2) in connection with the fraudulent scheme described above (United States v. Victor Cilli, Crim. No. 1-660 (AET) (D. NJ), and to other, unrelated charges. In the criminal case, Cilli agreed to pay $243,000 in restitution. The consent order in the CFTC’s case gives Cilli credit for any restitution payments made in the criminal action.

The CFTC thanks the U.S. Attorney’s Office for the District of New Jersey and NFA for their assistance.

The CFTC Division of Enforcement staff members responsible for this case are W. Derek Shakabpa, Judith M. Slowly, David Acevedo, Lenel Hickson, Stephen J. Obie, and Vincent McGonagle.