Anthony J. Klatch II, of Tampa, Florida, and his firm, American Private Equity, LLC, of Los Angeles, California, are facing charges of fraud following a federal court order freezing their assets on August 5, 2011. The U.S. Commodity Futures Trading Commission (CFTC) filed the enforcement action in the U.S. District Court for the Southern District of New York on July 27, 2011, alleging a scheme to defraud investors.
According to the CFTC, Klatch and APE LLC, along with three Commodity Pool Operators (CPOs) under Klatch’s control – ARM Capital Management, LLC, TASK Capital Management, LLC, and Vigilant Capital Management, LLC – fraudulently solicited at least 62 individuals to invest a collective $11.3 million into three commodity pools: ARM Capital Partners, LP, TASK Capital Partners, LP, and Vigilant Capital Partners, LP. The defendants are also accused of misappropriating over $2.1 million from these pools.
The complaint alleges that Klatch and APE LLC misrepresented Klatch’s trading history and the risk management policies of the pools to prospective investors. They reportedly claimed Klatch had a successful track record and that the pools had safeguards to limit potential losses. In one instance, they allegedly stated a pool had been successfully trading since 1997, despite Klatch being a middle school student at the time.
Instead of generating profits, Klatch’s trading allegedly resulted in losses exceeding $8.6 million for the pools. Furthermore, the defendants are accused of collecting over $2.5 million in management fees and expenses, significantly more than what was disclosed to investors. The CFTC seeks a return of ill-gotten gains, restitution for defrauded customers, civil monetary penalties, and permanent injunctions against further violations of federal commodities laws.
A court hearing was originally scheduled for August 4, 2011, but was rescheduled for August 17, 2011. The CFTC acknowledged the cooperation of the U.S. Attorney’s Office for the Southern District of Alabama, which had already indicted Klatch on July 27, 2011, as well as the U.S. Marshals Service and the FBI.
Source: CFTC.gov
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