Christopher Varlesio of Chicago, Illinois, has been charged with commodity fraud by the U.S. Commodity Futures Trading Commission (CFTC), following a civil enforcement action filed on March 7, 2012, in the U.S. District Court for the Northern District of Illinois. Varlesio operated a commodity pool, doing business as Gold Coast Futures and Forex, allegedly fraudulently trading commodity futures and off-exchange foreign currency (forex) contracts.
The CFTC complaint details accusations of false statements to investors, misappropriation of pool funds, and failure to register as a commodity pool operator. According to the complaint, from February 2008 through April 2011, Varlesio solicited at least $1,074,000 from eight individuals, issuing promissory notes with fixed monthly interest rates in return for their investments.
Varlesio is accused of misrepresenting his trading history and the pool’s performance to attract investors. Instead of utilizing the funds for trading as promised, the complaint alleges he misappropriated them for business and personal expenses, even admitting as much to at least one investor. He allegedly concealed the fraud by falsely touting his trading abilities and providing fabricated investment performance documents that omitted trading losses and misappropriated funds.
In March 2011, Varlesio ceased making interest payments on the promissory notes and later confessed to an investor that all funds were lost. Despite promises to repay investors, no restitution has been made, according to the CFTC. On March 8, 2012, U.S. District Court Judge Robert M. Dow, Jr. issued an emergency ex parte restraining order, freezing Varlesio’s assets and prohibiting the destruction of records. A hearing is scheduled for March 15, 2012.
The CFTC is seeking civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains, trading and registration bans, and preliminary and permanent injunctions against Varlesio. The U.S. Attorney’s Office for the Northern District of Illinois and the Illinois Secretary of State Securities Department assisted in the investigation.
Source: CFTC.gov
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