Miami resident Fabio Bretas de Freitas and his firm, Phy Capital Investments LLC, have been slapped with a hefty default judgment by the U.S. Commodity Futures Trading Commission (CFTC) for alleged fraud and misappropriation of client funds. The judgment, entered on October 3rd by Judge Jesse M. Furman of the Southern District of New York, totals over $23 million in penalties, restitution, and disgorgement.
The CFTC originally filed charges in May 2019, alleging that Bretas and Phy Capital fraudulently solicited clients with claims of a proprietary trading software, SoPhyA, which supposedly generated 49% profits on futures trading between February 2016 and November 2017. However, the order states that of the nearly $6.9 million in client funds received, only $155,000 was actually used for trading. The remaining funds were allegedly misappropriated for personal use or distributed to other clients in a Ponzi-like fashion.
Bretas also stands accused of misleading the National Futures Association (NFA) by falsely characterizing one of Phy Capital’s commodity pools as a private equity fund focused on intellectual property development. Court documents further reveal that Bretas created a fake email account to deceive NFA staff regarding a purported lender to the pool.
The judgment mandates Bretas and Phy Capital to pay a $12,608,982 civil monetary penalty, $4,625,166 in restitution to affected clients, and $5,752,042 in disgorgement of ill-gotten gains. Both are permanently banned from trading in CFTC-regulated markets. Separately, Bretas pleaded guilty in August 2019 to charges of conspiracy to commit wire fraud and commodities fraud in a related criminal case before the Southern District of New York and awaits sentencing.
The CFTC has cautioned that victims may not fully recover their losses, as wrongdoers often lack sufficient assets. The agency continues to emphasize its commitment to protecting customers and holding fraudulent actors accountable. The investigation received assistance from the NFA, the U.S. Attorney’s Office for the Southern District of New York, the FBI, and the Comissão de Valores Mobiliários of Brazil.
Source: CFTC.gov
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