IRVINE, CA – Daniel Hewko and his company, Main & Prospect Capital, LLC, are facing a hefty penalty and permanent bans following a default order issued by the U.S. District Court for the Central District of California on August 22. The Commodity Futures Trading Commission (CFTC) brought the case against Hewko, his father (who settled previously), and MPC in November 2019, alleging fraud, misappropriation of investor funds, and failure to register with the CFTC.
The court order mandates Hewko and MPC to pay $1,906,395 in restitution to victims defrauded by their scheme. Additionally, a $5.7 million civil monetary penalty has been levied against them. The order permanently prohibits Hewko and MPC from violating the Commodity Exchange Act (CEA) and CFTC regulations, and includes a lifetime ban from trading and registering with the CFTC.
According to the CFTC’s findings, between approximately August 2014 and November 2014, Hewko and MPC solicited investments for the “Global Opportunity Fund,” a pooled investment vehicle. Over $1.1 million from investors was transferred into a futures trading account, then subsequently moved to another FCM in December 2014. While limited trading of crude oil and E-mini S&P futures contracts occurred, the fund ultimately suffered losses.
From January 2016 through the third quarter of 2018, Hewko and MPC issued quarterly statements to investors falsely claiming investment returns. The CFTC determined these returns were fabricated, as the fund never actually generated any gains. Instead of utilizing investor funds as represented, Hewko and MPC allegedly misappropriated the money for personal use, benefiting Hewko, his family, and companies he controlled.
Hewko, as owner and manager of MPC, signed documents on behalf of the company and controlled the futures trading account. Neither Hewko nor MPC were registered with the CFTC as required, further compounding the violations. The CFTC warns that victims may not fully recover their losses due to potential limitations in the defendants’ assets.
The case was led by CFTC staff members Karin Roth, Michael Cazakoff, R. Stephen Painter, Jr., and Lenel Hickson.
Source: CFTC.gov
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