CFTC Files Charges Against $10M Ponzi Scheme Involving Derivatives

The Commodity Futures Trading Commission (CFTC) has charged Kentucky-based Turning Point Investments and its principal, William S. Evans, with running a trading Ponzi scheme that solicited at least $10 million from US investors.

The CFTC also obtained judgements against Evans’ wife as a relief defendant, to seize the funds she received from her husband’s fraudulent activities. She claimed the money was part of a business transaction for Turning Point, but the CFTC said Frances Evans failed to provide any documentation of a contract between her and the company.

A relief defendant is a person or entity who has received funds or assets as a result of the illegal acts of the other named defendants. He/she is typically named because the plaintiff seeks injunctive relief to protect the sought funds or assets and apply them to any eventual recovery in the case.

Starting in September 2018, Turning Point Investments took the monies form investors to be supposedly placed in a pooled commodity fund that purportedly trade S&P commodity futures contracts and options.

To create the illusion of stability, the defendants allegedly prepared and distributed false account statements to fund participants, telling investors that they made steady gains from trading derivatives, according to the complaint.

Based on the inflated profits, the defendants paid themselves several thousands of dollars in in fees, while in fact their trading account records reveal only infrequent and unprofitable trades. For new participants, they were assured to receive a double-digit guaranteed return, while they were actually duped into a Ponzi scheme.

Nearly all of the pool money was lost, according to the complaint that accuses the defendants of fraud, misappropriation, registration violations and issuing false statements.

If convicted, Evans could serve up to 20 years in prison.

The CFTC has asked the court to provide full restitution to defrauded pool participants, disgorgement of ill-gotten gains and to pay the appropriate civil monetary penalties. In addition to fiscal claims, the agency seeks permanent registration and trading bans and a permanent injunction from future violations of federal commodities laws.

“Evans allegedly paid some clients with non-existent profits in the manner of a Ponzi scheme while diverting other funds for his personal use. Although Evans promised participants that they would enjoy double-digit profits, the transactions he engaged in resulted in losses he failed to disclose. The complaint further alleges that Evans acted in a capacity requiring him to register with the CFTC as a commodity pool operator but failed to do so,” the CFTC stated in its filing.

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