POWAY, Calif. – Douglas Elsworth Wilson, 51, is facing federal charges following a CFTC investigation that revealed a $4.4 million fraud scheme targeting over 60 investors, authorities announced August 22, 2011. Wilson, along with his companies Elsworth Berg Capital Management LLC, Elsworth Berg Inc., and Elsworth Berg FX LLC, allegedly misappropriated customer funds and made false statements regarding investments in commodity futures and foreign currency (forex).
The U.S. Commodity Futures Trading Commission (CFTC) filed a civil complaint on July 27, 2011, in the U.S. District Court for the Southern District of California, leading to a federal court order on August 18, 2011, freezing the assets of Wilson and his companies, collectively known as Elsworth Berg. The order also prevents the destruction of company records.
According to the complaint, Wilson and Elsworth Berg solicited funds from customers with the promise of guaranteed returns of principal after five years, utilizing a “Collateral Reserve” structure based on life insurance policies on third parties. This structure was allegedly misrepresented to investors. Furthermore, Wilson and EBCM are accused of inflating the value of customer investments through false statements.
The CFTC alleges that Wilson and EBCM misappropriated approximately $72,000 in customer funds for personal use, rather than for trading purposes. The agency is seeking restitution for defrauded customers, as well as civil monetary penalties, permanent bans from trading and registration, and permanent injunctions to prevent further violations of federal commodities laws.
The California Department of Corporations assisted the CFTC in this investigation. Theodore Z. Polley III, Melissa Glasbrenner, William P. Janulis, Scott Williamson, Rosemary Hollinger, and Richard B. Wagner of the CFTC’s Division of Enforcement are handling the case.
Source: CFTC.gov
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