CFTC charges investment firm and VP with commodity pool fraud

The Commodity Futures Trading Commission CFTC has filed a civil enforcement action charging Winston Reed Investments LLC (WRI) and its vice president and investment consultant, Mark N Pyatt a/k/a Daniel Randolph, a former North Carolina resident, with misappropriation of customer funds and fraudulent solicitation in connection with a commodity pool.

The complaint alleges that from April 2017 through February 2019, WRI and Pyatt fraudulently solicited and received approximately USD200,000 from at least 19 pool participants in connection with pooled trades in commodity futures contracts and retail foreign exchange transactions, among other things.

As further alleged, WRI and Pyatt misappropriated most of pool participants’ funds for business expenses, personal use, and to make Ponzi-like payments to other pool participants. In addition, despite incurring overall net trading losses, WRI and Pyatt sent reports to investors falsely claiming large profits of between approximately 19 and 86 per cent per month.

In its continuing civil litigation, the CFTC seeks restitution to defrauded pool participants, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act, as charged.

On 20 February, 2020, the US Attorney’s Office for the Western District of North Carolina announced a separate criminal action against Pyatt. 

The CFTC thanks the Denver Regional Office of the Securities and Exchange Commission and the Office of the United States Attorney for the Western District of North Carolina for their assistance in this matter.

The Division of Enforcement staff members responsible for this action are James Garcia, Michael Loconte, and Rick Glaser.