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Ponzi scheme

CFTC charges Feisal Sharif over USD5.4m commodity pool Ponzi scheme

The US Commodity Futures Trading Commission has filed a civil enforcement action charging defendant Feisal Sharif of Branford, Connecticut with operating a commodity pool Ponzi scheme that solicited approximately USD5.4m from at least 50 people to invest in a commodity pool named First Financial.

Sharif allegedly misappropriated at least USD900,000 of pool participants’ funds, using the funds to pay personal expenses and purchase gifts.

The CFTC complaint also charges Sharif with failing to register as a commodity pool operator (CPO) of First Financial.

According to the complaint filed on 26 November in the US District Court for the District of Connecticut, from at least January 2007 and continuing until 13 September 2012, Sharif, in order to entice prospective participants, guaranteed monthly and yearly returns of one per cent to 15 per cent on investments in the pool.

Of the USD5.4m solicited from pool participants, at least USD900,000 was misappropriated, approximately USD1.32m was lost trading futures in accounts in the name of First Financial, and USD3.17m was paid out to certain pool participants as fictitious “profits” or returns of principal, according to the complaint. Sharif allegedly admitted to one pool participant that he was operating a Ponzi scheme.

To falsely assure pool participants that their funds were safe in the pool’s trading accounts, Sharif allegedly fabricated trading account statements from First Financial and from futures commission merchants.

In its continuing litigation, the CFTC seeks civil monetary penalties, trading and registration bans, restitution, disgorgement, and a permanent injunction against further violations of the federal commodities laws.

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