Kenneth L. Branch, 43, of Lanham, Maryland, is facing charges of fraud related to a $1.4 million commodity futures scheme, according to a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) on March 28, 2008, and a subsequent court order on April 4, 2008.
Branch, along with his company Cocoon Trade Inc., allegedly fraudulently solicited investments from at least 39 individuals, promising profitable returns in commodity futures trading. The CFTC alleges that Branch misappropriated at least $941,897 of investor funds, using the money to pay purported profits to earlier investors – a classic hallmark of Ponzi-style schemes – and to cover personal expenses.
The complaint details how Branch, a convicted felon who previously served twelve years in prison on drug-related charges, marketed himself as a successful trader through a website, www.cocoontrade.com, and a magazine article highlighting his purported turnaround. However, the CFTC claims Branch consistently incurred trading losses, except for a single month, resulting in overall losses in the hundreds of thousands of dollars.
According to the CFTC, Branch disappeared in February 2007, and investors have been unable to access their funds since. He was subsequently imprisoned in late 2007 for a parole violation related to his prior felony conviction, and released on April 2, 2008 – just days before the court issued a statutory restraining order freezing assets and prohibiting the destruction of documents.
The CFTC is seeking a permanent injunction against Branch, along with disgorgement of ill-gotten gains, restitution for investors, and civil monetary penalties. The case is being litigated in the U.S. District Court for Maryland. Staff members Kevin S. Webb, Kara Mucha, Michelle Bougas, Gretchen L. Lowe, and Vincent McGonagle are handling the case for the CFTC’s Division of Enforcement, with cooperation from the Maryland Attorney General’s Office.
Source: CFTC.gov
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