The Blotter: Florida Ponzi scheme operators ordered to pay $28.4 million

Florida

Federal court in Florida orders Philip Milton and Trade, LLC, and four relief defendants to pay millions in restitution, disgorgement, and civil monetary penalties for operating a $28.4 million Ponzi scheme

May 16, 2013 The Commodity Futures Trading Commission (CFTC) today announced that Judge Daniel Hurley of the U.S. District Court for the Southern District of Florida entered supplemental consent orders against defendants Philip Milton of Palm Beach Gardens, Florida, and Trade, LLC, based in Palm Spring Gardens, Florida, requiring Milton to pay restitution of more than $10.8 million and a $7.6 civil monetary penalty and Trade, LLC, to pay restitution of over $11.4 million and a $28.4 million civil monetary penalty for operating a multi-million dollar Ponzi commodity pool. 

The court also required relief defendants BD, LLCCMJ Capital, LLCCenter Richmond, LLC, and TWTT, LLC, all Florida corporations, to disgorge $545,200, $2,826,981.37, $1,253,862.62, and $100,000, respectively.

The CFTC filed a complaint against defendants Philip Milton, William Center, Gregory Center, and Trade, LLC on June 22, 2010, in the U.S. District Court for the Southern District of Florida.  The complaint charged the defendants with fraudulently soliciting approximately $28.4 million from at least 2,000 customers to participate in a commodity pool to trade futures and securities and with misappropriating at least $9.6 million of pool funds for their personal use and to continue the scam.  The complaint also named the four relief defendants, all corporations owned by the individual defendants, for receiving funds as a result of the defendants’ misappropriation to which they have no legitimate entitlement. 

On, April 15, 2011, the court entered a consent order of permanent injunction against Milton and entered a similar consent order against Trade, LLC and the relief defendants on September 6, 2011.  These consent Orders found the consenting parties liable for the fraud and misappropriation, as charged in the CFTC’s complaint, and ordered them to pay restitution, disgorgement, and civil monetary penalties in amounts to be determined at a later day.  The CFTC’s litigation continues against Defendants William Center and Gregory Center.

 

Georgia

 

CFTC revokes registrations of Georgia resident Robert A. Christy and his company, Crabapple Capital Group LLC

 

May 20, 2013 The Commodity Futures Trading Commission (CFTC) today announced the revocation of the registrations of Robert A. Christy of Milton, Georgia, and his company, Crabapple Capital Group LLC (Crabapple) of Alpharetta, Georgia.  Crabapple was registered with the CFTC as a commodity pool operator and commodity trading advisor, and Christy was registered as an associated person of Crabapple and listed as its sole principal.

 

On April 16, 2013, the CFTC judgment officer issued an initial decision on default against Christy and Crabapple finding that they were statutorily disqualified from CFTC registration based on the consent Order of permanent injunction entered by the U.S. District Court for the Northern District of Georgia on October 16, 2012.  The court’s Order, among other things, (1) finds that Christy and Crabapple violated the Commodity Exchange Act (CEA) and CFTC regulations by engaging in fraud and misappropriation in connection with their operation of a Ponzi scheme, (2) permanently enjoins Christy and Crabapple from engaging in fraudulent conduct in violation of specified provisions of the CEA  and CFTC Regulations, and (3) prohibits Christy and Crabapple from acting in any capacity requiring registration or acting as a principal or agent of a registrant. On May 16, 2013, the judgment officer’s initial decision became the order of the commission.

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