David Michael Kogan of Sherman Oaks, California, is facing charges of commodity fraud following a CFTC complaint filed on June 26, 2009, in the U.S. District Court for the Western District of Missouri. The complaint alleges Kogan and his company, First Capital Futures Group, operated a fraudulent scheme that caused losses exceeding $3 million for 58 customers.
According to the CFTC, Kogan and other brokers at First Capital fraudulently solicited public investors to trade options on commodity futures contracts. The solicitation involved misrepresentations and failures to disclose critical information regarding the likelihood of profit, the inherent risks of options trading, the actual positions held in customer accounts, and First Capital’s poor trading record.
The complaint details accusations that Kogan and his colleagues repeatedly assured customers of substantial and rapid profits through options trading. Simultaneously, First Capital allegedly failed to adequately inform customers about the potential for significant financial losses. Despite mounting losses among clients, Kogan and other brokers reportedly claimed to have “made millionaires” and that many customers were experiencing gains – statements the CFTC alleges were false.
The CFTC alleges that First Capital collected over $2.2 million in commissions and fees while customers lost more than $3 million overall. On June 30, 2009, Judge Dean Whipple issued an order freezing the assets of both First Capital and Kogan, as well as all customer accounts under their control. A preliminary injunction hearing was scheduled for July 14, 2009.
The CFTC is seeking a permanent injunction barring Kogan and First Capital from violating commodity laws and participating in related trading activities. They are also demanding the return of defrauded funds, repayment of illegally obtained gains, civil monetary penalties, and additional relief. The case is being pursued by CFTC staff members Jenny Chapin, Jo Mettenburg, Jeff Le Riche, Michael Loconte, Rick Glaser, and Richard Wagner.
Source: CFTC.gov
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