Mon, 16/04/2012 - 16:00
The US Commodity Futures Trading Commission (CFTC) has filed a complaint in federal court in Idaho charging Brad Lee Demuzio of Chubbuck, Idaho and his company, Demuzio Capital Management, with operating a Ponzi scheme that solicited nearly USD1.8 million.
The money was primarily deposited into a pooled investment vehicle, in connection with off-exchange foreign currency (forex) transactions. The defendants’ fraudulent scheme is alleged to have caused approximately USD900,000 in losses to investors, of which approximately USD700,000 was misappropriated by the defendants. Neither Demuzio nor Demuzio Capital Management has ever been registered with the CFTC.
From at least June 2008 to November 2011, Demuzio allegedly solicited prospective and actual pool participants to enter into partnerships for the purpose of trading in forex. During the period, Demuzio allegedly fraudulently solicited and accepted approximately USD1.8 million from at least 16 participants. In doing so, he also allegedly misled prospective and actual participants about the intended use of their funds.
According to the CFTC complaint, filed on 11 April, 2012, in the US District Court for the District of Idaho, Demuzio represented to pool participants that he would trade in forex on their behalf and they would share the profits. According to the complaint, Demuzio only traded a portion of the pool participants’ funds in forex, and, although the trading resulting in substantial losses, Demuzio sent pool participants monthly emails falsely stating that the investments were earning profits. Demuzio also allegedly misappropriated participants’ funds for a variety of personal uses, such as mortgage payments, restaurants, and retail shopping.
The complaint further alleges that when Demuzio could not meet investors’ requests for the return of funds, he fabricated a letter purporting to be from the CFTC and bearing the fraudulently copied signature of a CFTC officer, which falsely represented that the company’s funds had been frozen in connection with a purported CFTC investigation. The complaint also alleges that Demuzio subsequently fabricated a second letter fraudulently providing an update as to the status of the purported investigation as well as a third document purporting to be a dismissal of the investigation and bearing the fraudulently copied signature of an Administrative Law Judge.
According to the complaint, in February 2012, Demuzio admitted to Special Agents of the Federal Bureau of Investigation his role in the fraudulent scheme and fabrication of fraudulent CFTC documents.
In a related criminal action, Demuzio was indicted on 11 April, 2012, in the US District Court, District of Idaho, by a federal grand jury on five counts of wire fraud.
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