IDAHO FALLS, ID – Daren L. Palmer, 47, was ordered to pay over $41.2 million in penalties and disgorgement after being found guilty of operating a Ponzi scheme through his company, Trigon Group LLC, according to a federal court order issued October 4, 2010. The U.S. Commodity Futures Trading Commission (CFTC) originally charged Palmer on February 27, 2009, with solicitation fraud and misappropriation.
Judge Edward J. Lodge of the U.S. District Court for the District of Idaho mandated Palmer to return more than $20.6 million in ill-gotten gains to the victims of the fraud and to pay a civil penalty of the same amount. Palmer is also permanently banned from any involvement in commodity-related activities, including trading and registration with the CFTC.
The court found that Palmer, through Trigon Group, presented itself as a legitimate investment firm trading futures and options, promising annual returns of 20 to 25 percent. From September 2000, Palmer solicited over $68 million from at least 55 investors. However, he falsely claimed guaranteed returns and a history of consistent 20 percent or greater annual profits exceeding 12 years.
Instead of reinvesting profits, Palmer diverted funds for personal expenses. He paid himself flat monthly fees ranging from $25,000 to $35,000—totaling over $5.8 million—regardless of the company’s actual profitability. The court also determined Palmer misappropriated over $9 million towards building a new home, $360,000 for chartered flights, $980,000 for business expenses, and gifted over $2.7 million to family members.
Palmer fabricated account statements, falsely reporting nearly $60 million in assets as of June 2008, while his trading accounts held only approximately $1 million. In January 2008, Palmer admitted to owing investors between $35 and $45 million, confessing that he had lost or spent all funds and had been running a Ponzi scheme for years. Furthermore, he failed to disclose to investors that neither he nor Trigon were registered with the CFTC as required by law.
The CFTC collaborated with the Securities and Exchange Commission (SEC) and the Idaho Department of Finance on this case, with the SEC also filing a related action against Palmer and Trigon.
The case was led by CFTC staff members Alison Wilson, John W. Dunfee, Mary Kaminski, A. Daniel Ullman, Paul G. Hayeck and Joan Manley.
Source: CFTC.gov
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