Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that on August 9, 2012, a federal court in California entered a consent order that requires defendants Douglas Elsworth Wilson of Poway, Calif., and three companies he controls and manages, Elsworth Berg Capital Management LLC (EBCM), Elsworth Berg Inc., and Elsworth Berg FX LLC (collectively, Elsworth Berg) jointly and severally to pay $3,965,670.71 in restitution to customers as well as a $1.5 million civil monetary penalty. The order also imposes permanent trading and registration bans and permanent injunctions against further violations of federal commodities law, as alleged.
The order follows a CFTC civil complaint filed on July 27, 2011, in the U.S. District Court for the Southern District of California (see CFTC Press Release 6096-11). The order finds that the defendants solicited over $4.4 million from over 60 customers to trade commodity futures contracts and foreign currency (forex). According to the order, the defendants misappropriated customer funds, committed solicitation fraud, and issued false statements in the commodity futures and forex scheme.
Specifically, the order finds that defendants misrepresented to customers and prospective customers that regardless of Elsworth Berg’s commodity futures or forex trading results, the return of customers’ investment principal was guaranteed at the end of a five-year period through use of a purportedly innovative “Collateral Reserve” structure, which owned life insurance policies on third parties.
The order further finds that Wilson and EBCM issued false statements to some customers that overstated the value of their investments. Wilson and EBCM misappropriated approximately $72,000 in customer funds and used the money for purposes other than trading, according to the order.
The CFTC appreciates the assistance of the California Department of Corporations and the United Kingdom Financial Services Authority (FSA).
The CFTC Division of Enforcement staff members responsible for this case are Theodore Z. Polley III, Melissa Glasbrenner, William P. Janulis, Scott Williamson, Rosemary Hollinger, and Richard B. Wagner.