Kenneth Newcombe, Fraud, California 2024
WASHINGTON, D.C. – On October 2, 2024, the Commodity Futures Trading Commission (CFTC) filed a complaint in the U.S. District Court for the Southern District of New York against Kenneth Newcombe, of California, alleging fraud related to voluntary carbon credits. Newcombe, the former chief executive officer and majority shareholder of a Washington, D.C.-based carbon credit project developer, is accused of submitting false and misleading information to carbon credit registries and third-party reviewers.
The CFTC alleges that from at least 2019 through December 2023, Newcombe orchestrated a scheme to inflate the quality of his company’s emissions-reduction projects. This was allegedly done to obtain carbon credits beyond what was legitimately earned, which were then sold to other market participants. This marks the CFTC’s first enforcement action addressing fraud within the voluntary carbon credit market.
In addition to Newcombe, the CFTC also issued orders filing and settling charges against CQC Impact Investors LLC (CQC) and Jason Steele, CQC’s former chief operating officer. The order details a deceptive scheme by CQC, involving projects in sub-Saharan Africa, Asia, and Central America, designed to reduce carbon emissions through initiatives like installing efficient cookstoves and LED light bulbs. CQC is accused of fraudulently reporting false information to obtain millions of carbon offset credits it was not entitled to receive.
The CFTC is seeking civil monetary penalties, disgorgement of ill-gotten gains, restitution, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) from Newcombe. While details of the penalties for CQC and Steele were not immediately available, the CFTC noted a reduction in potential penalties for CQC due to substantial cooperation during the investigation.
“Today’s actions show strong enforcement is another critical step in ensuring the integrity of these markets,” said Chairman Rostin Behnam. Director of Enforcement Ian McGinley added that the case demonstrates the CFTC’s commitment to combating fraud in both established and emerging markets like the carbon credit sector.
Source: CFTC.gov
Source: https://www.cftc.gov/PressRoom/PressReleases/8994-24