David Kaup of San Gabriel, California, has been charged with fraud by the U.S. Commodity Futures Trading Commission (CFTC), the agency announced on October 23, 2012. Kaup, along with his companies Lunden Forex Partners, LP, Lunden Forex Management, LLC, Black Horse Funds, LLC, Black Horse Management, LLC, and Black Horse Partners, LP, allegedly defrauded investors through a foreign currency (forex) trading scheme.
The CFTC alleges that Kaup fraudulently solicited at least $1.7 million from approximately 24 customers between August 2008 and October 2009. He is accused of making false claims about a profitable trading history, providing fraudulent documentation, and guaranteeing monthly profits ranging from 5 to 10 percent. According to the agency, Kaup used these funds to make payments to existing customers and to cover personal expenses.
The CFTC’s order, filed on October 22, 2012, requires Kaup and his associated companies to jointly pay a $500,000 civil monetary penalty and restitution totaling $1,396,316. The respondents are also permanently prohibited from engaging in commodity-related trading activities and from registering with the CFTC. Furthermore, they are barred from violating anti-fraud provisions of the Commodity Exchange Act.
Investigators found that Kaup concealed trading losses and misappropriated customer funds by issuing false account statements and assuring customers their investments were profitable. The scheme resulted in investors losing almost $1.4 million. The CFTC collaborated with the U.S. Attorney’s Office for the Central District of California, the Federal Bureau of Investigation, the Pennsylvania Securities Commission, and the Securities and Exchange Commission during the investigation.
Mark A. Picard, Philip Rix, Steven I. Ringer, Lenel Hickson, Stephen J. Obie and Vincent A. McGonagle of the CFTC Division of Enforcement were responsible for the case.
Source: CFTC.gov
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