The US Commodity Futures Trading Commission (CFTC) has obtained a federal default judgment order requiring defendant Richard D.Theye of Austin, Texas, to pay more than USD6.2 million in restitution and civil monetary penalties for operating a commodity pool Ponzi scheme.
The order stems from a CFTC complaint filed on 1 June, 2010, that charged Theye and his company, Micind Capital Management, Inc, with fraud in connection with running a multi-million dollar Ponzi scheme .
The order, entered by US District Judge Sam Sparks of the US District Court for the Western District of Texas, requires Theye to pay restitution of USD5,700,587.02 and a USD560,000 civil monetary penalty for defrauding investors. The order also permanently bans Theye and Micind from engaging in any commodity-related activity, including trading, and from registering or seeking exemption from registration with the CFTC.
The order finds 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, LLC and First RYCO, LLC (the RYCO pools). Theye also encouraged prospective investors to roll over their 401(k)s, IRAs and pension funds into the RYCO pools, the order finds. Theye 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, according to the order.
The order further finds 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 and that Theye’s commodity futures trading resulted in losses of hundreds of thousands of dollars since 2006. To further the scheme, Theye issued fictitious account statements to investors showing trading profits when, in fact, no profits were realised, according to the order.
On June 1, 2010, the United States Attorney for the Western District of Texas filed a 13-count criminal indictment against Theye, who pled guilty to nine of the counts on July 13, 2010, and was sentenced to 144 months at the Lompoc Federal Correctional Institution in Lompoc, Calif.
