Mesa, Arizona – Derek Springfield has been ordered to pay over $2.2 million in restitution and penalties for defrauding commodity pool participants, according to a Consent Order entered by Judge David G. Campbell of the U.S. District Court for the District of Arizona on November 13, 2017. The Commodity Futures Trading Commission (CFTC) brought the enforcement action, initially filed December 13, 2016.
Springfield, along with his company Draven, LLC, fraudulently solicited at least $1.8 million from approximately 112 investors for pooled investments in commodity futures and foreign currency exchange (forex). The CFTC found that Springfield engaged in fraudulent sales practices, misappropriated funds, and provided false account statements to investors.
The Order mandates that Springfield and Draven, jointly and severally, pay $1,487,964.45 in restitution to the defrauded customers. Additionally, an $800,000 civil monetary penalty has been levied. The court has also permanently banned Springfield from trading and registering with the CFTC, and prohibited him from future violations of the Commodity Exchange Act and related regulations.
From June 2012 through December 2016, Springfield used Draven’s website to attract investors by falsely claiming funds would be segregated and traded by experienced professionals. However, the CFTC determined that only a small percentage of the deposited funds were actually traded, resulting in net losses of approximately $195,880. Springfield also improperly deducted 10% management fees even when the accounts incurred losses.
The investigation revealed that Springfield misappropriated investor funds to cover Draven’s corporate expenses, his personal expenses – including mortgage payments, food, shopping and medical bills – and to fulfill withdrawal requests from other clients. To conceal these losses and misappropriation, Springfield fabricated false statements showing profitable trading results, and operated a Ponzi-style scheme, using new investor funds to pay existing investors.
Source: CFTC.gov
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