James M. Peister, of St. James, New York, has been charged with fraud by the U.S. Commodity Futures Trading Commission (CFTC), the agency announced on February 3, 2011. Peister and his company, Northstar International Group, Inc., are accused of defrauding investors in a commodity pool by concealing significant trading losses and misappropriating funds.
The CFTC’s order alleges that from 2001 through early 2009, Peister and Northstar operated two commodity pools – the North American Globex Fund, LP, and the North American Globex Group, Inc. – soliciting over $19 million from approximately 72 individuals. Peister allegedly transferred funds between the pools and failed to accurately report substantial trading losses sustained by the Globex Group.
According to the CFTC, Peister and Northstar concealed these losses by issuing false monthly account statements and audit reports to investors in the Globex Fund. Despite the mounting losses, they continued to solicit new investments from both prospective and existing participants. Peister is accused of using pool participant funds to pay redemptions to other investors and to cover approximately $1 million in business and personal expenses.
The agency also found that Peister operated as an unregistered commodity pool operator and failed to provide required disclosures to investors in the Globex Group. As a result of these violations, the CFTC order requires Peister and Northstar to jointly pay $10,323,195.23 in restitution to defrauded investors, along with a $1 million civil monetary penalty. Peister is permanently prohibited from trading on or subject to the rules of any registered entity and is barred from applying for registration with the CFTC in the future.
The case was led by CFTC staff members James Garcia, Kara Mucha, Michael Solinsky, Gretchen L. Lowe, and Vincent A. McGonagle.
Source: CFTC.gov
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