The US CFTC has charged Haena Park (Park) and her companies Phaetra Capital GP, a/k/a/ Argenta Capital GP LLC, Phaetra Capital Management LP, a/k/a Argenta Capital LLC, and Argenta Group LLC, with fraudulently operating a commodity pool and misappropriation of pool participants’ assets.
The complaint also charges Park and Yul Kaseman with making false statements to the National Futures Association.
The CFTC complaint charges that from at least January 2010 through the present (the Relevant Period), Pool Defendants engaged in at least two fraudulent schemes in violation of the Commodity Exchange Act (Act): the Pool Defendants fraudulently solicited at least USD23 million from members of the public to participate in a commodity pool that traded futures contracts, as well as leveraged or margined retail off-exchange foreign currencies, and Park, as the agent and officer Argenta Capital LLC, a predecessor of Phaetra Management, duped at least one investment firm to authorise Park to manage the firm’s investment account.
The CFTC complaint alleges that the Pool Defendants fraudulently solicited approximately 50 members of the public (pool participants) who deposited over USD23 million into bank accounts opened in Park’s name and/or controlled by Park. In her solicitations, Park made material misrepresentations and omissions concerning her trading expertise and the purported profits she generated from her trading. For example, Park falsely claimed that an initial investment in November 2009 of USD1 million achieved a cumulative return of 393.2% and grew to USD4,778,229 by February 27, 2015.
According to the Complaint, Park’s trading on behalf of the pool participants resulted in a loss of more than USD18 million. Park hid these losses from the pool participants and falsely and fraudulently represented to existing and prospective pool participants that their funds were trading at a profit. To perpetrate her fraud, the complaint alleges, Park provided pool participants with false monthly statements with fabricated data.
Of the pool participants’ assets not lost in trading, the complaint further alleges that Park misappropriated portions of pool participants’ funds, using some of the funds from pool participants to make payments to other pool participants, in the manner akin to a Ponzi scheme, and to pay personal credit card bills, make cash withdrawals and pay other non-business related expenses not authorized by the pool participants.
In its continuing litigation, the CFTC seeks full restitution to defrauded pool participants, disgorgement of any ill-gotten gains, a civil monetary penalty, permanent registration and trading bans, and a permanent injunction against future violations of federal commodities laws, as charged.
The CFTC appreciates the assistance of the National Futures Association, the United States Attorney’s Office for the Southern District of New York, the US Department of Homeland Security and the Securities and Exchange Commission.