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CFTC charges Scott Bottolfson with operating a USD14m Ponzi scheme

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The US Commodity Futures Trading Commission (CFTC) has charged Scott Bottolfson and Spirit Investments, both of Encinitas, California, and Increase Investments, Inc of Reno, Nevada, with fraudulently soliciting approximately USD14 million from 30 individuals to invest in two commodity pools to trade commodity futures contracts and options on commodity futures.

Spirit and Increase allegedly operated the pools.

The CFTC’s complaint, filed in the US District Court for the Southern District of California, charges that, from approximately 2002 through August 2010, Bottolfson lured prospective participants with false or misleading representations, including promising a 20 per cent fixed-rate return on investments, that his investments were protected and guaranteed and that investing in commodity futures was risk-free.

Bottolfson allegedly told participants that his investments were profitable when, in fact, he suffered approximately USD845,000 in trading losses on the approximate USD2.97 million that was actually put into commodity pool trading accounts. Bottolfson is also charged with misappropriating approximately USD11 million of customer funds for personal expenses and to pay existing pool participants purported profits, as is typical of a Ponzi scheme.

In its continuing litigation, the CFTC seeks restitution to defrauded participants, a return of ill-gotten gains, civil monetary penalties, trading and registration bans and permanent injunctions against further violations of the federal commodities laws.

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