The US Commodity Futures Trading Commission has filed a notice of intent to revoke the registrations of Victor E Cilli and Progressive Investment Funds (PIF).
PIF, based in Hackensack, New Jersey, is a registered commodity pool operator. Cilli is a New Jersey resident registered as an associated person of PIF and is PIF’s sole principal.
The CFTC notice, filed on 21 September 2012, alleges that Cilli and PIF are subject to statutory disqualification from CFTC registration based on a consent order for permanent injunction entered by the US District Court for the District of New Jersey on 29 May 2012 .
The consent order finds, in relevant part, that Cilli and PIF engaged in fraud by misrepresentations and omissions of material facts by: 1) knowingly and wilfully sending pool participants statements that falsely stated that the commodity pool they operated had made money when, in fact, the pool had lost money trading, 2) by omitting that Cilli had only traded a portion of the pool’s funds, and 3) by engaging in a Ponzi scheme by sending some pool participants purported profits in order to conceal the scheme.
The consent order also permanently enjoined Cilli and PIF from further violations of the anti-fraud provisions of the Commodity Exchange Act, imposed restitution of USD243,000, and ordered them to pay a USD474,000 civil monetary penalty.
In addition, the notice alleges that Cilli and PIF are subject to disqualification from CFTC registration based on Cilli’s conviction for criminal securities fraud in connection with the commodity pool he operated, as entered by the US District Court for the District of New Jersey on 3 October 2011. Cilli was convicted, in relevant part, of: 1) engaging in a Ponzi scheme that defrauded four commodity pool participants of USD506,000, 2) trading only approximately USD263,000 of the pool funds, losing approximately USD200,168 of that amount, and failing to disclose this information to the pool participants, 3) sending some of the pool participants false statements showing profits when, in fact, the pool lost money, and 4) misappropriating thousands of dollars to pay for personal expenses.
On 18 June 2012, the District Court sentenced Cilli to 36 months in prison and ordered him to pay USD243,000 in restitution.