Fraud

Federal Court fines Colorado man over foreign currency fraud

The US Commodity Futures Trading Commission (CFTC) has obtained federal court orders for more than USD3.5m in restitution and civil monetary penalties against Nicholas Trimble and his companies, Capstone FX Quantitative Analysis and Beekeepers Fund Capital Management.

The orders relate to the CFTC’s 7 November 2011 complaint charging Trimble and the two companies with commodity pool and managed account fraud.

On 14 March 2013, the Honorable Philip A Brimmer of the US District Court of Colorado entered a consent order for permanent injunction against Trimble requiring him to pay USD887,399 in restitution and a USD400,000 civil monetary penalty to settle the CFTC’s charges against him. That order also permanently bans Trimble from engaging in any commodity-related activity, including trading and registering with the CFTC, and prohibits him from violating the anti-fraud provisions of the Commodity Exchange Act, as charged.

On 28 January 2013, Judge Brimmer also entered an order for default judgment and permanent injunction against Capstone and Beekeepers that requires the two companies to pay a total of more than USD885,000 in restitution to victims of the fraud, and a total of more than USD1.3m in civil monetary penalties. The order also permanently bans Capstone and Beekeepers from engaging in any commodity-related activity, including trading and registering with the CFTC, and prohibits the companies from violating the anti-fraud provisions of the Commodity Exchange Act, as charged.

Specifically, the CFTC’s 2011 enforcement action against Trimble, Capstone, and Beekeepers charged them with fraudulently soliciting and accepting more than USD1.1m from customers to trade foreign currency (forex) through pooled and managed trading accounts using an automated forex trading system called the “Gladiator system.”  The complaint further alleged that Trimble, Capstone, and Beekeepers made false representations to customers regarding their trading success and misappropriated approximately USD441,000 of customer funds and used the money for gambling at Las Vegas casinos and for Trimble’s personal expenses. 

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