CARLSBAD, CA – October 5, 2015 – Alexander Glytenko of Carlsbad, California, has been ordered to pay $2,459,633 in restitution and a $1,392,000 civil penalty after being found liable for commodity pool fraud by the U.S. Commodity Futures Trading Commission (CFTC). The judgment, entered by Judge Cynthia Bashant of the U.S. District Court for the Southern District of California, also permanently bans Glytenko and his company, Direct Investment Products, Inc. (DIP), from violating the Commodity Exchange Act (CEA) and CFTC Regulations, and prohibits them from future trading and registration activities.
The case stems from a CFTC complaint filed in December 2013, alleging that Glytenko and DIP fraudulently solicited approximately $3.9 million from roughly 761 investors in Russia and former Soviet republics for investment in a commodity pool called DIP Capital Partners.
According to court findings, from 2005 through 2010, Glytenko and DIP knowingly misrepresented the pool’s performance. This included presenting fabricated performance figures for years the pool didn’t exist, showcasing hypothetical trading results without proper disclosure, and falsely reporting profitable performance for a fund that had actually incurred losses.
In 2009, after freezing investor withdrawals due to substantial losses within the pool, Glytenko allegedly diverted $464,000 in participant funds to a personal loan. The CFTC emphasized that restitution orders do not guarantee full recovery of lost funds, as wrongdoers may lack sufficient assets.
The CFTC acknowledged the assistance of the National Futures Association, the Cyprus Securities and Exchange Commission, and the Bermuda Monetary Authority in the investigation. Alan I. Edelman, James H. Holl, III, Michelle Bougas, Dmitriy Vilenskiy, and Gretchen L. Lowe of the CFTC’s Division of Enforcement were responsible for the case.
The CFTC encourages anyone with information about potential commodity trading violations to contact its Division of Enforcement via the toll-free hotline at 866-FON-CFTC or submit a tip online.
Source: CFTC.gov
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