West Bloomfield, Michigan resident Dwight A. Foster and his firm, K.E.L. Enterprises, Inc. (KEL), are facing charges of fraud, registration violations, and inadequate record-keeping following a civil enforcement action filed by the Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the Eastern District of Michigan.
The CFTC alleges Foster and KEL operated a multimillion-dollar fraudulent scheme, soliciting approximately $13.2 million from customers across the United States. The complaint details a scheme running from approximately January 1, 2017, to the present, where Foster and KEL solicited funds for a commodity pool intended to trade in foreign currency (forex) pairs and futures contracts.
However, instead of utilizing the funds for trading as promised, the CFTC claims Foster and KEL misappropriated all participant funds. These funds were allegedly deposited into KEL’s corporate bank accounts, not into a dedicated pool account at a registered futures commission merchant or retail forex dealer. The misappropriated funds were then used to cover Foster’s personal expenses, including a car loan, insurance, credit card payments, and general living costs.
The CFTC further alleges that Foster and KEL operated a Ponzi-like scheme, using approximately $10.1 million from newer investors to pay purported “profits” or “redemptions” to earlier investors. Throughout this period, KEL operated as an unregistered commodity pool operator (CPO), and Foster acted as an unregistered associated person of a CPO, both in violation of CFTC regulations. KEL also allegedly failed to maintain required disclosures and accurate books and records.
The CFTC is seeking full restitution for defrauded participants, disgorgement of any ill-gotten gains, and civil monetary penalties. The agency cautions potential victims that recovery of lost funds is not guaranteed, as wrongdoers may lack sufficient assets. The CFTC stated it will “continue to fight vigorously” for customer protection and accountability.
The investigation received assistance from the U.S. Attorney’s Office for the Eastern District of Michigan and the Federal Bureau of Investigation. The CFTC’s enforcement team included Timothy J. Mulreany, George H. Malas, Kassra Goudarzi, and Paul G. Hayeck.
The CFTC encourages the public to verify the registration of individuals and companies before investing and provides resources, including a Forex Fraud Advisory, to help identify potential scams.
Source: CFTC.gov
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