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Sunday, June 28, 2015

CFTC CHARGES MAN, COMPANY WITH DEFRAUDING INVESTOR PARTICIPANTS IN INVESTMENT POOL

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 
June 24, 2015
CFTC Charges Illinois Resident Nick A. Wurl and His Company Ludiera Capital LLC with Fraud and Misappropriation in $9 Million Scheme

Defendants allegedly defrauded at least 46 participants in an investment pool
Wurl was charged with wire fraud in a related criminal action

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) filed a federal enforcement action in the U.S. District Court for the Northern District of Illinois against Defendants Nick A. Wurl and his company Ludiera Capital LLC, both of Chicago, Illinois, charging them with fraud, misappropriation, and the issuance of false statements in connection with an investment pool they operated that traded commodity futures contracts and options on futures contracts. According to the CFTC Complaint, “In reality, the pool was little more than a shell company used to defraud pool participants and enrich Defendants at their expense.”

On May 27, 2015, the U.S. Department of Justice (DOJ), in a related criminal complaint filed in the U.S. District Court for the Northern District of Illinois, charged Wurl with wire fraud. In conjunction with that action, DOJ obtained writs of garnishment against known accounts in the names of Wurl and Ludiera.

The CFTC’s Complaint alleges that Defendants fraudulently solicited over $9 million from at least 46 investors for the represented purpose of trading physical commodities, such as soybeans and other agricultural commodities, as well as energy products. In their solicitations, Defendants fraudulently represented that (1) Defendants would only invest participants’ funds in the buying and selling of physical commodities; (2) Defendants’ physical commodity trading was generating profits for participants; (3) Defendants were not engaged in the trading of futures or options; (4) participants’ funds would be maintained in segregated accounts; and (5) the worst potential outcome for investors was 0 percent return on investment.

According to the Complaint, and contrary to the represented investment strategy, Defendants never engaged in physical commodity trading. Rather, the bulk of participants’ funds — over $6.8 million — was pooled and used by Defendants to trade futures and options. Defendants never disclosed to participants the risk of trading futures and options and never disclosed that a significant portion of participants’ funds would be used for trading futures and options. Further, Defendants never disclosed that Defendants were sustaining significant trading losses. Rather, Defendants operated to conceal their commingling and misappropriation of customer funds and trading losses by providing pool participants with false reports and account statements showing fictitious profits.

The CFTC Complaint also alleges that Defendants misappropriated at least $600,000 of participants’ funds to pay down personal credit card debt and purchase vehicles, among other things. Akin to a Ponzi scheme, and in order to further disguise their trading losses and misappropriation, the Defendants also distributed approximately $1.8 million to pool participants in redemptions, utilizing other pool participants’ principal to fund these payments.

In its continued litigation, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and preliminary and permanent injunctions from further violations of the federal commodities laws, as charged.

The CFTC thanks and acknowledges the assistance of the U.S. Attorney’s Office for the Northern District of Illinois and the Federal Bureau of Investigation.

CFTC Division of Enforcement staff members responsible for this action are Rachel Hayes, Rebecca Jelinek, Stephen Turley, Lauren Fulks, Diane Romaniuk, Peter Riggs, and Charles Marvine.

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