Washington, DC -- The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained more than $41.2 million in disgorgement and civil monetary penalties in a federal court order against Daren L. Palmer and his company, Trigon Group LLC (Trigon), both of Idaho Falls, Idaho. The CFTC charged the defendants on February 27, 2009, with solicitation fraud and misappropriation in operating a commodity pool Ponzi scheme (see CFTC Press Release 5623-09, February 27, 2009).
The summary judgment order, entered by Judge Edward J. Lodge of the U.S. District Court for the District of Idaho on October 4, 2010, requires Palmer to disgorge more than $20.6 million of ill-gotten gains to the victims of his fraud and to pay a civil monetary penalty of more than $20.6 million. The order also permanently bars Palmer from engaging in any commodity-related activity, including trading, and from registering or seeking exemption from registration with the CFTC.
Trigon, through Palmer, was held out to be an investment business that traded futures and options and generated high returns of 20 percent to 25 percent annually, the order finds. Since September 2000, Palmer solicited and accepted more than $68 million from at least 55 pool participants, according to the order.
In soliciting pool participants, Palmer misrepresented that participants’ returns were guaranteed and claimed that his investments had been generating annual returns of 20 percent or greater for more than 12 years, the order finds. While telling participants that he would retain a portion of the generated profits, Palmer, in fact, paid personal credit card bills and salary with flat monthly fees ranging between $25,000 and $35,000 per month, or over $5.8 million total, regardless of Trigon’s profitability, the order finds. In addition, the court found that Palmer misappropriated pool participants’ money for personal use, including over $9 million to build a new home, more than $360,000 to charter planes and more than $980,000 for business expenses. Additionally, Palmer gave over $2.7 million of pool participant funds to close family members, the order finds.
Through manufactured account statements sent to pool participants, Palmer misrepresented that pool and customer accounts had increased to almost $60 million by June 2008, when, in fact, Palmer’s trading accounts held only approximately $1 million, the order finds. The order also finds that in or around January 2008, Palmer admitted to owing pool participants $35 to $45 million but claimed that he had lost or expended all funds and that he had been running a Ponzi scheme for many years.
Finally, Palmer did not disclose to pool participants that neither he nor Trigon was registered with the CFTC, as required by federal commodities law, the order finds.
The CFTC appreciates the assistance of the Securities and Exchange Commission (SEC) and the Idaho Department of Finance. The SEC filed a related action against Palmer and Trigon that also resulted in sanctions against them.
The CFTC Division of Enforcement staff members responsible for this case are Alison Wilson, John W. Dunfee, Mary Kaminski, A. Daniel Ullman, Paul G. Hayeck and Joan Manley.