Fort Bragg, California resident Daniel Hewko has been permanently banned from trading commodities and faces hefty penalties after admitting to defrauding investors, the Commodity Futures Trading Commission (CFTC) announced Wednesday.
The U.S. District Court for the Central District of California entered a consent order on June 7, requiring Hewko to pay $500,000 in restitution to victims and a $107,500 civil monetary penalty. The order also permanently prohibits Hewko from violating the Commodity Exchange Act (CEA) and CFTC regulations, and includes a 10-year trading ban.
The CFTC initially filed suit against Hewko, his son Daniel Adam Hewko, and their firm Main & Prospect Capital, LLC in November 2019. The complaint alleged fraud, misappropriation of investor funds, and failure to register with the CFTC as an Associated Person of a Commodity Pool Operator. The case against Daniel Adam Hewko and Main & Prospect Capital, LLC remains ongoing.
According to the order, beginning in August 2014, Hewko solicited over $1.1 million from investors for the “Global Opportunity Fund.” He transferred the funds into a futures trading account, purportedly to trade crude oil and E-mini S&P 500 futures contracts. However, the order states that any actual trading resulted in losses, and no legitimate returns were generated for investors.
Hewko allegedly fabricated account statements, falsely reporting investment gains to investors from January 2016 through October 2018. He also allegedly diverted funds to unauthorized entities and individuals. When investors requested withdrawals, Hewko reportedly falsely claimed funds were “in a trade” or that losses hadn’t occurred, despite knowing the money had been spent.
Furthermore, the CFTC found that Hewko solicited funds for a commodity pool without registering with the agency as required.
The CFTC reminds investors that court orders for restitution do not guarantee recovery of lost funds, as wrongdoers may lack sufficient assets. The agency stated it will continue to pursue accountability for those who violate commodity trading laws.
Source: CFTC.gov
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