Commodity Pool Fraud: Another Type of Securities Fraud
In commodity pool arrangements, an individual or an organization obtains and pools money from multiple investors. The money is then invested in commodities and in futures. Commodity pools are a legitimate form of investing in commodities when regulations established by the Commodity Future Trading Commission are followed. In some cases, however, commodity pool scams occur.
If you play any role in a commodity pool fraud, you could be required to repay investor losses through the CFTC Reparations Program. You could also face state and federal criminal charges. You need to understand your rights and explore options for staying out of prison if you are accused of breaking the law.
At Bukh Law Firm, PLLC, our New York City criminal defense lawyers have represented many clients accused of financial crimes. We understand the commodities market and the regulations governing it, and we can help you to make informed and strategic choices when you are being accused of commodity pool fraud.
Whether you need help reducing the chance of being required to pay reparations or you are fighting to avoid imprisonment if an indictment is handed down, our securities fraud attorneys are here to help you.
Commodity Pool Fraud
Commodity pool fraud generally takes three primary forms:
- Misrepresentation of the investment or its risks: If a commodity pool is marketed aggressively with misleading statements, such as promises of
lowrisks and/or high returns, this marketing can be considered a type of fraud.
- Misappropriation of investment funds: The pooled funds may be misspent on things other than investments in commodities. The operator of the commodity pool has an obligation to maintain separate financial accounts for investor funds and to use invested funds to purchase commodities with the goal of earning
profitfor investors. Depositing the funds into personal financial accounts or using them for other purposes is illegal misappropriation.
- Operating a commodity pool without registering: Operators of pools with 14 or fewer investors and less than $200,000 in assets do not need to register, but must disclose their status as non-registered to investors if they opt out of formally registering.
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Some types of commodity pool fraud may be more serious than others. Misappropriation of funds or misrepresentation of an investment opportunity
Criminal Penalties for Commodity Pool Fraud
If you are accused of commodity pool fraud, a reparations hearing can cause you significant financial worries as you may be required to repay huge sums of money. You could also face a criminal indictment.
It is not uncommon for people accused of commodity pool fraud to be charged with multiple criminal offenses. For example, 7 U.S. Code Section 13 indicates that anyone who is registered, or required to register, who intentionally converts more than $100 of money received from a pool participant is committing a felony. The penalties for this offense include a maximum of 10 years in prison and a $1 million fine.
In addition to offenses specific to commodities pool fraud, defendants can also be charged with general fraud offenses. For example, the U.S.
Getting Legal Help if Accused of Commodity Pool Fraud
If you don’t want to end up spending years in prison when you are under investigation for commodity pool fraud, you need to make smart choices that can help to reduce the chances of being found guilty or that can make a favorable plea deal possible.
Navigating the criminal justice system is always difficult, especially in cases involving complex financial crimes.
At Bukh Law Firm, PLLC, our attorneys
Give us a call today to schedule a consultation and learn more.