CFTC: Convicted felon raised $30 mil for Growth Capital Mgmt.

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) charged Robert Mihailovich, Sr., and Growth Capital Management, LLC, (GCM), both of Rockwall, Texas, with fraudulent solicitation in connection with the trading of commodity futures contracts and leveraged foreign currency (forex). Mihailovich, Sr., is a felon who was on supervised release while he was soliciting for and operating GCM.

The CFTC’s complaint, filed in the U.S. District Court for the Northern District of Texas on July 27, 2010, also charges that GCM, a registered commodity trading adviser and a commodity pool operator, and Robert Mihailovich, Jr., also of Rockwall and the listed principal and registered associated person of GCM, made false statements in required regulatory filings with the CFTC by failing to disclose that his father, Mihailovich, Sr., was a controlling principal of GCM.

The CFTC’s complaint alleges that, since at least June 2008, GCM and Mihailovich, Sr., fraudulently solicited and accepted more than $30 million from approximately 93 customers to invest in futures and forex through discretionary accounts traded by GCM. To induce new investors, Mihailovich, Sr., made false representations claiming to be a successful commodity futures trader and touting GCM as having a profitable trading record. According to the complaint, Mihailovich, Sr., stated that he never experienced a losing trade. However, actual trading accounts managed and controlled by Mihailovich, Sr., realized net losses.

Mihailovich, Sr., also failed to disclose to customers that he had a federal felony conviction for mail fraud, was ordered to pay approximately $197,000 in restitution, served 27 months in prison and was on a three-year supervised release.

In its continuing litigation, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans and a permanent injunction prohibiting further violations of the federal commodities laws.

The CFTC thanks the Securities and Exchange Commission’s Fort Worth Regional Office and the National Futures Association for their assistance with this matter.

The following CFTC Division of Enforcement staff members are responsible for this case: Stephen T. Tsai, Maura M. Viehmeyer, Philip Tumminio, Michelle Bougas, Anne Termine, Gretchen L. Lowe and Phyllis J. Cela.

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