Broomall, PA – January 8, 2009 – Joseph S. Forte, 58, of Broomall, Pennsylvania, has been charged by the U.S. Commodity Futures Trading Commission (CFTC) with operating a $50 million Ponzi scheme through his unregistered commodity futures pool, Joseph Forte, L.P. Forte recently confessed to federal authorities following the collapse of the scheme.
The CFTC’s complaint alleges Forte committed solicitation fraud, misappropriated pool funds, sent customers false account statements, and failed to register with the CFTC as a commodity pool operator. The United States District Court for the Eastern District of Pennsylvania has issued a restraining order, freezing assets and preserving records related to the case.
According to the complaint, from at least February 1995 through late 2008, Forte fraudulently solicited approximately $50 million from dozens of investors, promising substantial returns through commodity futures trading. He claimed a successful track record, representing to one church group that the fund had generated annual returns ranging from 18.52% to 36.19% over an eight-year period.
However, the CFTC alleges that Forte was neither successfully trading nor actively attempting to do so. While he purportedly sustained net losses of at least $3 million trading S&P 500 futures contracts, he allegedly conducted little to no trading at all for a 34-month period between 2004 and 2007. Furthermore, no funds were reportedly deposited into the trading account for a 53-month period from October 2002 to February 2007.
Instead of legitimate trading profits, Forte allegedly used funds from new investors to pay off existing participants and cover business expenses. He also paid himself management and incentive fees based on the falsified earnings and inflated value of the pool, reportedly totaling more than $28 million, while confessing to taking between $10 and $12 million personally.
The CFTC is seeking restitution, disgorgement of ill-gotten gains, civil monetary penalties, and permanent injunctions against further violations of federal commodities laws. Efforts are ongoing to locate and recover funds for the scheme’s participants.
Acting Director of Enforcement Stephen J. Obie stated the CFTC is “committed to rooting out miscreants who…destroy the lives of innocent victims and, ultimately, undermine the confidence of investors everywhere.”
Source: CFTC.gov
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