ARIZONA RESIDENT GETS 30 MONTHS IN PRISON IN COMMODITY POOL FRAUD CASE

FROM:   COMMODITY FUTURES TRADING COMMISSION 

CFTC Obtains Court Order against Arizona Resident Thomas L. Hampton for Issuing False Account Statements and Operating as an Unregistered Commodity Pool Operator

Hampton ordered to pay a $1.5 million penalty and permanently barred from any commodity-related activities

In a related criminal matter, Hampton sentenced to 30 months in prison and ordered to pay over $4.8 million in restitution

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge H. Russel Holland of the U.S. District Court for the District of Arizona entered an Order of final judgment by default and permanent injunction against Defendant Thomas L. Hampton of Scottsdale, Arizona. The Order requires Hampton to pay a $1.5 million civil monetary penalty, imposes permanent trading and registration bans on him, and prohibits him from violating the Commodity Exchange Act (CEA), as charged. Hampton has never been registered with the CFTC.

The Order, entered on January 23, 2014, stems from a CFTC Complaint filed on June 11, 2013, charging Hampton with acting as an unregistered Commodity Pool Operator (CPO) and issuing false account statements in violation of the CEA (see CFTC Press Release 6609-13, June 12, 2013).

The Order finds that, from approximately September 2010 through at least September 2011, Hampton, while acting as an unregistered CPO, operated Hampton Capital Markets, LLC, an Arizona limited liability company, as a commodity pool. The Order finds that Hampton solicited approximately $5.2 million from at least 72 pool participants to invest in the pool for the purpose of trading commodity futures contracts, including E-mini S&P 500 futures contracts and E-mini Dow futures contracts, as well as securities-based index products. The Order also finds that Hampton defrauded pool participants by issuing false account statements that represented that the pool was generating significant trading profits, when, in fact, Hampton’s actual trading in the HCM Pool accounts resulted in net losses virtually every month.

In a related criminal action, on April 19, 2013, Hampton pleaded guilty to one count of commodities fraud. In October 2013, Hampton was sentenced to 30 months in prison and was further ordered to pay over $4.8 million in restitution (United States v. Thomas Hampton, Case No. 13-cr-00301-RWS (United States District Court for the Southern District of New York)).

The CFTC appreciates the assistance of the Arizona Corporation Commission, Securities Division, and the U.S. Attorney’s Office for the Southern District of New York.

CFTC Division of Enforcement staff responsible for this case are Eugene Smith, Tracey Wingate, Kyong J. Koh, Peter M. Haas, Paul G. Hayeck, and Joan Manley.

FUTURES TRADER TO PAY OVER $3 MILLION IN CFTC ACTION AND PLEADS GUILTY IN CRIMINAL CASE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 
November 26, 2013

Federal Court in Connecticut Orders Feisal Sharif to Pay over $3 Million to Settle Fraud Charges in CFTC Action

In a related criminal action, Sharif pled guilty to criminal violations of the Commodity Exchange Act

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court Order against defendant Feisal Sharif of Branford, Connecticut, requiring him to pay restitution of $2,230,000 to defrauded customers and a $900,000 civil monetary penalty, as well as permanent trading and registration bans against Sharif for violations of the Commodity Exchange Act (CEA).

The Order, entered on November 21, 2013, by the Honorable Stefan R. Underhill of the U.S. District Court for the District of Connecticut, stems from a CFTC Complaint filed on November 26, 2012, charging Sharif with fraudulent solicitation, misappropriation, and registration violations (see CFTC Press Release 6424-12).

The Order finds that, between January 2007 and September 2012, Sharif, by and through the commodity pool First Financial LLC, fraudulently solicited and accepted over $5.4 million from at least 50 members of the general public to trade commodity futures contracts through a pool. The Order further finds that Sharif traded only a portion of the pool participant funds in proprietary accounts and sustained overall and significant losses. Sharif misappropriated the majority of the pool participant funds to make so-called returns to participants in payments that he claimed were the profitable proceeds of their trading, the Order finds. Sharif also misappropriated pool participant funds for personal use, according to the Order.

Sharif concealed his fraud and trading losses from pool participants by issuing false account statements reflecting profits, the Order finds. Sharif also made excuses regarding the safety of pool participants’ investments.

The Order also finds that Sharif failed to register with the CFTC as a Commodity Pool Operator as required by the CEA.

In a related criminal action, Sharif pled guilty to criminal violations of the CEA. Sharif is scheduled to be sentenced in January 2014 (see USA v. Sharif No. 3:13-cr-00172-SRU-1).

The CFTC thanks the Securities and Business Investments Division of the State of Connecticut Department of Banking, the Federal Bureau of Investigation, and the U.S. Attorney’s Office for the District of Connecticut for their assistance.

CFTC Division of Enforcement staff members responsible for this case are Amanda Harding, James Deacon, Jessica Harris, Kenneth McCracken, Rick Glaser, and Richard Wagner.