The word FRAUD with magnifying glass

CFTC charges Hasaan R Steel with commodity pool fraud

The US Commodity Futures Trading Commission (CFTC) has filed an anti-fraud enforcement action charging Hasaan R Steel of Brooklyn, NY, with fraudulently soliciting more than USD1 million from 28 participants to invest in a commodity pool to trade commodity futures and securities.

Steel, a self-described day trader of futures and stocks, has never been registered with the CFTC in any capacity, according to the CFTC’s civil complaint, filed under seal on February 7, 2011, in the US District Court for the Eastern District of New York. On the same day, the Honourable Nicholas G Garaufis signed an order freezing Steel’s assets and prohibiting the destruction of books and records. The order also schedules a hearing on the CFTC’s motion for a preliminary injunction on February 16, 2011.

Specifically, the complaint alleges that, from at least August 2007 to the present, Steel enticed prospective pool participants by misrepresenting his trading track record by claiming he earned monthly returns of 20 per cent to 100 per cent. Steel’s actual trading records do not support his claims, as it appears that he only traded futures and stocks in nine different months over the entire life of the scheme, with only three months of positive trading, according to the complaint. Steel allegedly never opened a pooled trading account and traded very little of participants’ funds.

For example, of the approximately USD1 million taken in from pool participants, Steel allegedly traded only USD133,000, or 13.1 per cent, and misappropriated the majority of participants’ funds for personal use to pay for gambling, food, cable TV/internet and telephone and hotel expenses. Steel also allegedly gave misappropriated money to certain family members. To lull participants into a false sense of security that their funds were safe and being traded, Steel made false oral and written statements about the pool’s trading activity, performance and account balances and provided false computer-screen snapshots of the pool’s purported account balances for at least two futures commission merchants, according to the complaint.

The complaint also charges Steel with registration violations and failure to operate the commodity pool in accordance with the federal commodities laws.

The CFTC’s complaint seeks disgorgement of ill-gotten gains, restitution to defrauded pool participants, civil monetary penalties, rescission of all contracts and agreements, permanent trading and registration bans and a permanent injunction against further violations of federal commodities laws.

Steel was arrested and arraigned on February 7, 2011, in connection with a related criminal complaint.

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