The US federal court of Southern Iowa has imposed a permenant trading and registration ban against forex and commodities companies Stroud Capital Management, TS Capital Partners, and TS Capital Management and their principal John David Stroud for committing commodity pool frauds and violating the Commodity Exchange Act, the US Commodity Futures Trading Commission (CFTC) said on Tuesday.
The court also ordered on 1 March, 2016, Stroud and his the three companies to pay combined more than $4.7 million in restitution and penalty for committing commodity pool fraud. The offenders have to pay nearly $2.4 million in restitution to victims and another $2.3 million as a civil monetary payment.
The offenders had accepted about $4.9 million from at least 17 investors to partake in two separate commodity pools. Stroud used the funds to trade commodity futures and off-exchange forex contracts in the Stroud Capital Fund and the TS Capital Fund commodity pools. Of the collected amount, Stroud, though his companies, lost some $1.2 million and misappropriated $2.3 million between August 2008 and October 2011.
The court order was based on a complain by the CFTC dated March 2012, when the regulator charged Stroud and his companies with fraud and misappropriation. At the time, the Alabama court froze the assets of the offenders.
Stroud had consistently assured investors that his businesses were profitable for them. Moreover, whenever investors, some of which also his employees, asked for their funds, Stroud provided false account statements and tax records and an inflated version of the pool account balance, which was in fact Stroud’s own personal bank account
He also tried to conceal his actions by presenting false representations to the US National Futures Association (NFA) during two audits conducted in April and October 2011. He concealed from the NFA any trading activities related to customer funds and misrepresented the amount of funds he and his companies managed.
Stroud was sentenced in November 2013 to 10 years in prison for similar criminal action and was ordered to pay some $2.1 million in restitution. At the time he pleaded guilty of securities fraud.
The CFTC noted investors should be cautious and check on brokers with which they choose to engage. It highlighted that disgorgement orders may not always result in the recovery of lost funds since offenders may not always have sufficient funds to cover the amount.
Our research showed the websites of the three companies are not operational. Instead, some of them don’t open at all and on others there is a notice saying “currently under construction”.
We strongly advice you to be cautious regarding your investments and to only choose brokers and investment companies that are regulated by reputable financial watchdogs, such as the CFTC, CySEC, FINMA, FCA, etc.