ST. LOUIS, MO – Grahame Rhodes, of St. Louis, Missouri, is facing federal charges following a civil enforcement action filed by the U.S. Commodity Futures Trading Commission (CFTC) on September 19, 2012, in the U.S. District Court for the Eastern District of Missouri. Rhodes is accused of operating a decade-long Ponzi scheme that defrauded family and friends out of at least $2.1 million.
According to the CFTC complaint, Rhodes solicited at least 12 individuals to invest in a commodity pool, falsely promising annual returns ranging from 20 to 50 percent through trading E-mini S&P futures contracts. However, the complaint alleges Rhodes never achieved these returns and most of his trades resulted in losses.
The CFTC alleges Rhodes misappropriated all funds received from investors, using the money to finance a lavish lifestyle, including luxury cars, credit card bills, private school tuition, and mortgage payments. He also allegedly used new investor funds to pay fictitious profits to existing investors, characteristic of a Ponzi scheme. Funds were reportedly commingled with Rhodes’ personal accounts.
Rhodes is further accused of providing false information to investors regarding their returns and the value of their investments, and of submitting a forged trading account statement claiming a balance of $3.4 million to at least one investor.
The CFTC is seeking civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains, trading and registration bans, and permanent injunctions against Rhodes to prevent further violations of the Commodity Exchange Act and CFTC regulations. The U.S. Attorney’s Office in St. Louis and the Federal Bureau of Investigation’s Field Office in St. Louis assisted in the investigation.
Source: CFTC.gov
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