The US District Court for the Middle District of Florida has frozen the assets of defendants Philip Leon of Altamonte Springs, Florida, Paul Rangel of Apopka, Florida, John Wilkins of Chuluota, Florida, and their company, Altamont Global Partners of Longwood, Florida.
The order also prohibits the defendants from destroying or altering books and records. The judge set a hearing date for 30 July 2012.
The order arises from a CFTC federal court enforcement action filed on 16 July 2012, charging the defendants with futures, foreign currency and options fraud, and misappropriation. The CFTC complaint also charges the defendants with making false statements to the National Futures Association (NFA). AGP and Wilkins are registered with the CFTC and are NFA members.
The complaint alleges that since at least March 2009 until at least 22 June 2012, defendant AGP — owned and operated by Leon, Rangel, and Wilkins — solicited approximately USD13m from approximately 198 participants who invested in two investment pools operated by AGP: The McKinley Fund and The Matterhorn Fund. These pools traded futures, options, and off-exchange forex contracts, according to the complaint.
The defendants allegedly misappropriated more than USD5.2m of pool funds, using the funds to cover AGP’s operating expenses, commission payments, travel, meals, entertainment expenses, USD140,000 in credit card payments for Leon’s wife, and at least one loan AGP made to Leon. The misappropriation also allegedly included the use of pool funds to pay “loans” and “advances” of approximately USD1,419,000 to Leon, USD615,000 to Rangel, and USD651,000 to Wilkins.
To perpetuate their fraud and misappropriation, the defendants allegedly prepared and distributed false quarterly account statements to pool participants that purported to show pool participants earning profits on their investments. According to the complaint, as of the quarter ending 31 March 2012, AGP issued quarterly statements to pool participants that, collectively, showed that the Matterhorn pool participants’ interests were approximately USD10m, and the McKinley pool participants’ interests were approximately USD6.5m.
However, in actuality, as of 31 March 2012, the value of all assets held by Matterhorn was approximately USD1m and the value of all assets held by McKinley was approximately USD2.2m, according to the complaint.
AGP and Wilkins allegedly attempted to hide their fraud from the NFA. During a June 2012 examination, AGP and Wilkins allegedly provided the NFA with several oral and written false statements in an attempt to conceal the defendants’ trading losses and misappropriation of pool funds. Notably, AGP and Wilkins provided the NFA with false balance sheets stating that, as of 31 March 2012, Matterhorn had a purported net asset balance of USD9.9m and McKinley had a purported next asset balance of USD6.5m, according to the complaint. Eventually, Wilkins admitted to NFA staff that AGP had been providing falsely inflated quarterly statements to Matterhorn and McKinley pool participants since 2009, according to the complaint.
In its continuing litigation, the CFTC seeks civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains, trading and registration bans, and preliminary and permanent injunctions against further violations of the federal commodities laws, as charged.