COMMODITY POOL OPERATOR CHARGED WITH ALLEGED FRAUD BY CFTC

The following excerpt is from the CFTC website:

“Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a complaint in federal court in North Carolina, charging defendant Mitchell Brian Huffman of Charlotte, N.C., with operating a fraudulent commodity pool scheme that defrauded participants of more than $3.2 million in connection with exchange-traded commodity futures contracts. Huffman has never been registered with the CFTC.

From at least August 2006 to March 11, 2011, Huffman allegedly solicited prospective and actual pool participants, mainly family and friends, via in-person and direct telephone solicitations, to buy and sell exchange-traded commodity futures contracts on their behalf. During the period, Huffman allegedly fraudulently solicited and accepted approximately $3.2 million from at least 30 participants throughout the United States. In doing so, he also allegedly misled prospective and actual participants about the likelihood of profits and the substantial risks involved in such investments.

According to the CFTC complaint filed on February 7, 2012, Huffman entered into “sponsorship agreements” with pool participants. Huffman told pool participants that he would trade commodity futures contracts on their behalf. Huffman allegedly said that he utilized a “proprietary trading program” that generated “profits” of 100 percent to 150 percent per year and claimed that he retained 20 percent of all purported profits from the “proprietary trading program” as a fee for his services. However, according to the complaint, all of Huffman’s representations of “profits” from trading were false, and his claimed rates of return were completely fictitious.

Furthermore, Huffman allegedly misappropriated participants’ funds for a variety of personal uses, including 1) purchasing multiple motor vehicles, including two Land Rovers and a Smart Car, 2) using at least $71,255 on purchases related to his classic car collection, 3) spending approximately $188,583 on personal travel and luxury vacations, including Disney cruises and first class airfare to Hawaii and Las Vegas, Nevada, and 4) using approximately $51,540 for charitable contributions in his name. The trip to Hawaii was allegedly a 25thwedding anniversary celebration for Huffman, and he brought along several pool participants on the trip, purportedly at his own expense. Huffman never disclosed to these participants that he was using their funds to pay for the luxury vacation, according to the complaint.
When Huffman could no longer sustain his fraudulent scheme, he admitted to special agents of the Charlotte, North Carolina office of the Federal Bureau of Investigation the fraudulent scheme and his participation, according to the complaint.
In September 2011, Huffman pleaded guilty to one count of commodities fraud (U.S. v. Mitchell Brian Huffman, Case No. 3:11-cr-246-RJC, U.S. District Court for the Western District of North Carolina).

The CFTC appreciates the assistance of the Office of the U.S. Attorney for the Western District of North Carolina and the Federal Bureau of Investigation, Charlotte Office.
CFTC Division of Enforcement staff responsible for this case are Timothy J. Mulreany, Michael Amakor, Paul Hayeck, and Joan Manley.”