Fraud

Winsome and US Ventures to pay over USD40m for commodity pool fraud

The US Commodity Futures Trading Commission (CFTC) has obtained a federal court order requiring Robert J Andres and his company Winsome Investment Trust and Robert L Holloway and his company US Ventures (USV) to pay a civil monetary penalty of USD32,370,000 and restitution for defrauded customers totalling USD12 million. 

The court’s order also imposes permanent trading and registration bans against Andres, Winsome, Holloway, and USV and prohibits them from violating provisions of the Commodity Exchange Act, as charged.
 
The default judgment order stems from a CFTC civil enforcement action filed on 24 January 2011, which charged the defendants with fraud in the operation of a commodity futures pool.
 
From at least May 2005 through November 2008, Andres and Winsome fraudulently solicited and accepted at least USD50.2 million from at least 243 individuals to invest in a commodity futures pool operated by Holloway and USV.  In their solicitations, Andres and Winsome falsely claimed a successful track record and guaranteed the return of participants’ principal and profits; however, contrary to Andres’s and Winsome’s claims of consistently profitable trading, USV’s and Holloway’s futures trading was not successful, sustaining overall net losses of approximately USD10.7 million.
 
The defendants allegedly traded only a portion of Winsome’s pool’s funds and misappropriated the majority of participant funds to pay purported “profits” to pool participants in a manner akin to a Ponzi scheme, to provide money to Andres’ wife, and to invest in various unrelated and undisclosed businesses, including using USD4.2 million of participant funds to purchase an aerospace consulting business. 
 
Holloway used participant funds to pay personal and unrelated business expenses, and to pay for houses, cars, home furnishings, jewellery, lawn and maid services, and credit card bills in the name of his wife.  Holloway also used participant funds to finance his wife’s eBay business, Alcoy Enterprises.
 
Andres and Holloway attempted to conceal the fraud by directing employees to falsify participants’ account records and by providing e-mailed account statements to participants falsely representing that Holloway profitably traded pool funds – sustaining virtually no losses during the relevant period. 
 
In a parallel criminal actions brought by the US Attorney’s Office for the District of Utah, Andres was indicted on five counts of wire fraud, and Holloway was indicted on four counts of wire fraud and one count of making and filing a false income tax return.  Holloway’s trial date is currently set for 8 July 2014.  Andres pleaded guilty to one count of wire fraud, and he is scheduled to be sentenced on 20 August 2014.

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