A civil enforcement action has been filed by the U.S. Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the Central District of California, charging Daniel Adam Hewko, his father Daniel Hewko, and their firm, Main & Prospect Capital, LLC, with fraud.
The complaint alleges a scheme dating back to at least August 2014, where the defendants received over $2.3 million from at least 19 investors for the “Global Opportunity Fund,” a pooled investment vehicle operated by Main & Prospect Capital. While marketed as investing in stocks, commodities, and foreign currency, the complaint states that more than $1.1 million was used to trade a limited number of futures contracts, with the remainder allegedly misappropriated.
According to the CFTC, Adam Hewko directed the creation of false account statements claiming the fund was profitable, which were then distributed to investors by Daniel Hewko. When investors attempted to withdraw their funds, Daniel Hewko allegedly fabricated reasons for delays, claiming assets were “in a trade” or citing the CFTC investigation, while continuing to falsely report profitable investments.
The complaint further details violations of CFTC registration requirements, alleging Main & Prospect Capital failed to operate as a separate legal entity or register as a commodity pool operator. Both Adam and Daniel Hewko are accused of failing to register as associated persons of the firm.
The CFTC is seeking full restitution for defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act. The Division of Enforcement is being led by Karin N. Roth, Michael Cazakoff, R. Stephen Painter, Jr., Lenel Hickson, Jr., and Manal M. Sultan.
The CFTC urges anyone with information about potential commodity trading violations to contact them via toll-free hotline 866-FON-CFTC (866-366-2382) or submit a tip online.
Source: CFTC.gov
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