POWAY, Calif. – Douglas Elsworth Wilson, 51, has been ordered to pay over $5.4 million in restitution and penalties for defrauding over 60 customers in a commodity futures and foreign currency (forex) scheme, the U.S. Commodity Futures Trading Commission (CFTC) announced August 13, 2012. The federal court in California entered a consent order on August 9, 2012, requiring Wilson and his companies – Elsworth Berg Capital Management LLC, Elsworth Berg Inc., and Elsworth Berg FX LLC – to jointly and severally pay $3,965,670.71 in restitution.
In addition to the restitution, Wilson and his companies will pay a $1.5 million civil monetary penalty. The order also permanently bans them from trading and registering with the CFTC and permanently enjoins them from further violations of federal commodities law. The case originated from a CFTC complaint filed July 27, 2011, in the U.S. District Court for the Southern District of California.
The CFTC found that Wilson and Elsworth Berg solicited over $4.4 million from customers, promising guaranteed returns of their principal investment after five years through a so-called “Collateral Reserve” structure involving life insurance policies on third parties. This structure was, in fact, a fraudulent misrepresentation.
Investigators determined that Wilson and Elsworth Berg issued false statements to customers, overstating the value of their investments. Approximately $72,000 in customer funds were misappropriated by Wilson and used for purposes other than trading, according to the order. The CFTC worked in conjunction with the California Department of Corporations and the United Kingdom Financial Services Authority (FSA) during the investigation.
Theodore Z. Polley III, Melissa Glasbrenner, William P. Janulis, Scott Williamson, Rosemary Hollinger, and Richard B. Wagner of the CFTC Division of Enforcement led the investigation.
Source: CFTC.gov
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