CFTC charges Varlesi with commodity pool fraud
The US Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Christopher Varlesi of Chicago, Illinois, individually and doing business as Gold Coast Futures and Forex (Gold Coast).
The CFTC is charging Varlesi with fraudulently operating a commodity pool to trade commodity futures and off-exchange foreign currency (forex) contracts. The CFTC complaint also charges Varlesi with making false statements to pool participants, misappropriating pool funds, and failing to register as a commodity pool operator.
On 8 March, 2012, US District Court Judge Robert M Dow, Jr entered an emergency ex parte restraining order freezing Varlesi’s assets. The order also prohibits him from destroying or altering books and records. The judge set a hearing date for 15 March, 2012.
The CFTC complaint, filed on 7 March, 2012, in the US District Court for the Northern District of Illinois, alleges that from at least February 2008 through at least April 2011, Varlesi, doing business as Gold Coast, solicited and accepted at least USD1,074,000 from at least eight individuals in connection with his commodity pool. In exchange for their investment, Varlesi issued promissory notes to pool participants paying a fixed monthly interest rate on principal, according to the complaint.
Varlesi allegedly misrepresented his trading “track record” and the pool’s performance when soliciting and accepting pool participants’ funds. Instead of trading pool participants’ funds as promised, Varlesi allegedly misappropriated some of those funds. The complaint also alleges that Varlesi confessed, to at least one pool participant, that he had spent the majority of that participant’s funds on business and personal expenses, and to pay other pool participants.
To conceal and perpetuate the fraud, Varlesi allegedly touted his ability to trade futures and forex contracts profitably and made verbal misrepresentations. Varlesi also provided at least one pool participant with false investment performance documents that failed to disclose trading losses and misappropriation, according to the complaint.
In or around March 2011, Varlesi stopped making interest payments on the promissory notes and, after weeks of delays and excuses, confessed to at least one pool participant that all investor money was gone, according to the complaint. Despite subsequent promises to repay the pool participants, Varlesi allegedly has not done so.
In its continuing litigation, the CFTC seeks civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains, trading and registration bans, and preliminary and permanent injunctions against further violations of the federal commodities laws.
- Special Reports
- By Location
- Asian Hedge Funds
- BVI Hedge Fund Services
- Bermuda Hedge Fund Services
- Canada Hedge Fund Services
- Cayman Hedge Fund Services
- Channel Islands Stock Exchange
- Future of offshore funds
- Gibraltar Hedge Fund Services
- Guernsey Hedge Fund Services
- Hedge Funds in Germany
- Hong Kong Hedge Fund Services
- Ireland Hedge Fund Services
- Isle of Man Hedge Fund Services
- Jersey Hedge Fund Services
- Jersey Private Equity Services
- Latin American Hedge Funds
- London Hedge Fund Services
- Luxembourg Hedge Fund Services
- Luxembourg Private Equity Services
- Malta Hedge Fund Services
- Middle East Hedge Fund Services
- Singapore Hedge Fund Services
- South African Hedge Fund Services
- Spanish Hedge Funds 2008
- Switzerland Hedge Funds
- US East Coast Hedge Fund Services
- US Hedge Fund Services
- By Subject
Latest Special Report
- By Location