David Michael Kogan, of Sherman Oaks, California, has been ordered to pay over $20.3 million in penalties and restitution following a federal judgment in a CFTC anti-fraud action, announced March 9, 2010. The U.S. Commodity Futures Trading Commission brought the case against Kogan and his company, First Capitol Futures Group, alleging a fraudulent commodity options scheme.
The judgment, entered by the U.S. District Court for the Western District of Missouri, stems from charges filed in 2009. Authorities found that Kogan and First Capitol Futures Group operated a scheme that defrauded 58 customers out of more than $3 million.
The court order requires Kogan and his company to each pay a $7,540,000 civil monetary penalty. They are also jointly and severally liable for restitution totaling $3,064,061 to the defrauded customers. Additionally, the defendants must disgorge over $2.2 million in commissions and fees earned during the operation of the scheme. Kogan and First Capitol Futures Group are permanently banned from the futures industry.
According to the CFTC, between 2007 and 2008, Kogan and other brokers at First Capitol fraudulently solicited public investors to trade options on commodity futures contracts. The solicitation involved misrepresentations and omissions of material facts, including exaggerating potential profits, downplaying risks, concealing the existence of certain options positions, and failing to disclose the poor performance of other First Capitol customers trading options.
The CFTC alleges that Kogan and his brokers repeatedly told customers they would quickly earn substantial profits trading options while routinely failing to inform them of the inherent risks. Of the $3 million in customer losses, $2.2 million consisted of commissions and fees charged by Kogan and First Capitol Futures Group.
The case was led by CFTC Division of Enforcement staff members Jeff Le Riche, Jennifer Chapin, Peter Riggs, Michael Loconte, Jo Mettenburg, Rick Glaser and Richard Wagner.
Source: CFTC.gov
Related Federal Cases
MORE FEDERAL CRIME NEWS
US NewsUS NewsUS NewsUS News