DALLAS, TX – Carl W. King, 61, of Dallas, Texas, has been implicated in a multi-million dollar fraud scheme, according to a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) on August 30, 2006, in the Northern District of Texas. The CFTC alleges that King, operating through his company Carl W. King Investments, LLP, defrauded customers out of more than $4.5 million between 1995 and February 2003.
The complaint details a scheme where King falsely advertised to potential clients that his firm managed over $15 million in assets and consistently generated positive returns, sometimes exceeding 20%, through commodity futures trading. However, the CFTC alleges that funds deposited by customers into a corporate account were not actually invested in trading.
Instead, King is accused of diverting customer funds for personal expenses, including his mortgage and healthcare costs. To conceal this misappropriation, King allegedly issued falsified account statements showing fabricated profits and used funds from new investors to make “profit” payments to existing customers – a classic hallmark of a Ponzi scheme.
This CFTC action follows a related criminal case in the Eastern District of Texas, where King previously pled guilty to one count of mail fraud stemming from these activities. He is currently serving an 87-month prison sentence in federal prison.
The CFTC acknowledged the cooperation of the Securities and Exchange Commission, the Texas State Securities Board, and the U.S. Attorney’s Office for the Eastern District of Texas in bringing this case to light. The investigation was led by CFTC enforcement staff including Timothy J. Mulreany, David Reed, Mary Kaminski, Paul Hayeck, and Joan Manley.
As of April 8, 2007, the case remains ongoing with regards to civil penalties and restitution sought by the CFTC.
Source: CFTC.gov
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