The US Commodity Futures Trading Commission has charged Michael Anthony Jenkins of Raleigh, North Carolina, and his company, Harbor Light Asset Management (HLAM), with operating a Ponzi scheme for the purpose of trading E-mini S&P 500 futures contracts. 

From at least January 2011 through January 2012, the defendants fraudulently solicited at least USD1.79m from approximately 377 persons, primarily located in Raleigh, NC, in connection with the scheme, according to the complaint. 

The CFTC complaint also charges Jenkins, the owner and president of HLAM, with embezzlement and failure to register with the CFTC as a futures commission merchant.  Furthermore, Jenkins allegedly misappropriated USD748,827 of investors’ funds to trade gold and oil futures, stock index futures, and E-mini futures in his personal accounts. Jenkins also used misappropriated funds to pay for charges at department and discount stores and gasoline stations, and for cellular phone bills and airline tickets, according to the complaint.

The CFTC complaint, filed on 20 November 2012, alleges that HLAM’s investment agreement falsely represented to investors that their investment was solely for investing in E-mini futures and that investors’ funds would be immediately wired to a specific trading account. However, according to the complaint, most of investors’ funds were misappropriated by HLAM and Jenkins. 

To conceal and continue the fraud, Jenkins allegedly sent trading spreadsheets and statements to investors that falsely reported trades and profits earned and inflated the value of investments. The defendants’ fraudulent conduct resulted in a loss of approximately USD1.3m in investor funds, consisting of USD1.16m in misappropriated and embezzled funds and USD140,000 in trading losses, according to the complaint.

In its continuing litigation, the CFTC seeks restitution, return by Jenkins and HLAM of all ill-gotten gains received, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the Commodity Exchange Act, as charged. 

In a related criminal action by the Securities Division of the North Carolina, Department of the Secretary of State, Jenkins was indicted on 20 August 2012 on three counts of securities fraud in The General Court of Justice, State of North Carolina, Wake County, and is in custody awaiting trial.