The US Commodity Futures Trading Commission has charged Donovan Davis Jr., Blayne Davis, Damien Bromfield, Capital Blu Management and DD International Holdings with operating a fraudule
The US Commodity Futures Trading Commission has charged Donovan Davis Jr., Blayne Davis, Damien Bromfield, Capital Blu Management and DD International Holdings with operating a fraudulent commodity scheme involving about 100 investors and approximately USD17m solicited purportedly to invest in foreign currency futures and options.
The complaint was filed under seal on 23 March 2009 in the US District Court for the Middle District of Florida. On the same day, the Honorable John Antoon II entered an order freezing defendants’ assets and preserving books and records.
As alleged, defendants told prospective investors that their funds would be pooled in the CBM FX Fund, a commodity pool established by Capital Blu. Rather than pool investor funds, the defendants split the funds into trading of both off-exchange and on-exchange forex futures and off-exchange forex options.
In addition, the defendants allegedly deposited millions of dollars into multiple Capital Blu bank accounts, where funds were commingled and misappropriated for personal use, including luxury automobiles, private jet charters and a two-night USD40,000 spree at a ‘gentlemen’s club’.
Ultimately, as alleged, of the USD17m solicited, USD7m was lost in trading and millions of dollars remain unaccounted for.
To hide their fraud, the complaint alleges, D. Davis, B. Davis, and Bromfield provided investors with phoney account statements misrepresenting the earnings in their accounts by showing consistent monthly profits as high as seven per cent for 12 straight months (September 2007 through August 2008). In fact, as alleged, defendants’ actual trading resulted in net losses every month.
According to the complaint, B. Davis withdrew more than USD135,000 of the pool participants’ funds and deposited those funds into accounts held in the name of one or more of Nakano Capital Partners, Nakano Capital Advisors, and/or Nakano Capital Management, all of whom have been named in the CFTC complaint as relief defendants. None of these entities provided legitimate services to the FX Fund and have no legitimate entitlement to the funds they received.
In its continuing litigation, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties, and permanent injunctions against further trading.
