Ponzi scheme

CFTC charges Richard Theye with fraud in multi-million dollar Ponzi scheme

The US Commodity Futures Trading Commission has filed an action in the federal court in Austin, Texas, charging Richard D. Theye and his company, Micind Capital Management, with fraud in connection with running a multi-million dollar Ponzi scheme.

On 17 June, the CFTC also filed a motion for a statutory restraining order to freeze the defendants’ assets and prohibit the destruction of books and records.

The SRO motion also requests that the court order the defendants to make a full accounting of all funds received by and paid to investors. The court scheduled a hearing on the CFTC’s motion for 9 July.

The CFTC’s complaint charges that since at least December 2005, Theye fraudulently solicited members of the general public to invest millions of dollars in two commodity pools, Ryco Group and First Ryco, and encouraged prospective investors to roll over their 401(k)s, IRAs and pension funds into the Ryco pools.

Theye also allegedly solicited investors through false representations during face-to-face meetings at his church in Austin and in advertising the Ryco pools’ purported historical profits trading commodity futures.

The CFTC further charges that Theye misappropriated the vast majority of pool participants’ funds to perpetuate a Ponzi scheme by paying false “profits” to pool participants using other pool participants’ funds. Theye’s commodity futures trading resulted in losses of hundreds of thousands of dollars since 2006, according to the complaint. The complaint alleges that, to further the scheme, Theye issued fictitious account statements showing trading profits when, in fact, no profits were realised.

Theye employed a separate scheme to defraud a Micind investor whereby he entered into an agreement on behalf of Micind to trade for the customer in exchange for a capital contribution, according to the complaint. However, Theye never traded for the customer, issued the customer fictitious statements showing profitable trading and used the customer’s funds to finance his Ponzi scheme, the complaint charges.

In its continuing litigation, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans and a permanent injunction prohibiting further violations of federal commodities laws.

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