The US Commodity Futures Trading Commission (CFTC) has charged Victor Eugene Cilli and his company, Progressive Investment Funds LLC (Progressive), both of Hackensack, NJ, with operating a commodity pool Ponzi scheme that defrauded at least four investors of approximately USD506,000.
Cilli also is charged with misappropriating at least USD200,000 of pool funds to pay personal expenses, including meals, entertainment, motorcycle payments and hair salon visits. Progressive is a CFTC-registered Commodity Pool Operator, and Cilli is registered as an Associated Person of Progressive.
According to the complaint filed on June 15, 2011, in the US District Court for the District of New Jersey, from at least September 2006 through February 2009, defendants Cilli and Progressive used false statements in offering memoranda and verbal misrepresentations to mislead pool participants about Cilli’s business and futures trading track record. For example, the defendants falsely told investors that Cilli was a successful business manager and futures trader but failed to disclose Cilli’s USD13.5 million bankruptcy in 2002 or that his actual futures experience was limited to about one month of trading, according to the complaint.
As part of the fraud, Cilli provided pool participants with false and misleading statements showing profits when, in fact, most of Cilli’s trading resulted in losses, according to the complaint. To convince investors that the profit statements were true, Cilli allegedly returned some funds from prior investors back to pool participants in a manner similar to a Ponzi scheme.
Cilli also allegedly provided the National Futures Association (NFA) with false information concerning the composition of the pool and failed to maintain required pool documents with the NFA.
In its continuing litigation, the CFTC seeks restitution to defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans and permanent injunctions against further violations of the federal commodities laws.
