Craig A. Riley, of Ladera Ranch, California, has been penalized $1 million and permanently barred from commodity-related trading activities by the U.S. Commodity Futures Trading Commission (CFTC) for operating a fraudulent commodity pool and misappropriating funds. The CFTC issued the order on February 18, 2010.
The investigation revealed that from the fall of 2006 through February 2008, Riley, through his firm Pressio Capital Management, LP (PCM), operated a commodity pool called Pressio LP. Riley solicited over $3 million from approximately 19 individuals, falsely claiming the pool was a conservative, diversified balanced asset fund.
However, the CFTC found Riley lost roughly $2.5 million trading commodity futures and diverted the remaining funds for personal and business expenses, as well as to repay earlier investors—essentially a Ponzi scheme. He further concealed these losses and misappropriations by issuing falsified account statements to pool participants, inducing them to invest additional money.
Riley and PCM also violated CFTC regulations by failing to register as a Commodity Pool Operator and Associated Person, and by not adhering to required operational standards.
This CFTC enforcement action runs parallel to a criminal case. On January 12, 2009, Riley pleaded guilty to fraud related to a scheme to defraud and obtain money through false pretenses. He is currently serving a 41-month prison sentence. Restitution ordered in the criminal case totaled $3,044,384.59. The criminal case is United States v. Riley, Case No. SA CR 09-0001, filed in the Central District of California.
The CFTC acknowledged the assistance of the United States Attorney’s Office for the Central District of California in the investigation.
Source: CFTC.gov
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