A federal court in New York has ordered Kevin P. Whylie of Ozone Park, New York, Matthew James Zecchini of East Islip, New York, and their hedge fund, Algointeractive Inc., to pay over $1 million in penalties and restitution for fraudulent practices. The Commodity Futures Trading Commission (CFTC) filed the enforcement action on April 11, 2018, alleging fraudulent solicitation and misappropriation of funds.
Judge Loretta A. Preska of the U.S. District Court for the Southern District of New York issued two orders. A consent order was approved with Whylie on October 24, 2018, requiring him to pay a $100,000 civil monetary penalty. A default judgment was awarded against Zecchini and Algointeractive on November 13, 2018, after they failed to appear in court, mandating a joint and several payment of $721,650 in civil penalties.
In addition to the penalties, the court ordered the defendants to pay $240,550 in restitution to investors. All three defendants are permanently banned from trading and registering with the CFTC, and are enjoined from further violations of the Commodity Exchange Act and related regulations.
The court found that Whylie, Zecchini, and Algointeractive made false claims to investors regarding their experience, track record, and assets under management. They falsely represented that participant funds would be pooled and invested in futures contracts. However, only a fraction of the solicited funds were actually deposited into a trading account, and only $59,450 was returned to investors, some through Ponzi-style payments using funds from other investors.
Investigators determined the defendants misappropriated the majority of the funds for personal expenses, including food, transportation, and entertainment. False documents, including inflated account statements and expense charts, were used to conceal trading losses and the misappropriation of funds. Algointeractive also failed to operate as a separate legal entity, commingled funds, and did not register with the CFTC as required.
The CFTC reminds investors that court orders for repayment do not guarantee recovery of lost funds, as defendants may lack sufficient assets. The agency says it will continue to pursue cases to protect customers and ensure compliance with regulations.
Source: CFTC.gov
Related Federal Cases
- Todd Faustin, Workers’ Compensation Fraud, New York NY, 2023 · New York
- Kenneth Thom, Investment Adviser Fraud, New York NY, 2026 · New York
- Kenneth Thom, Investment Adviser Fraud, New York NY, 2023 · New York
- Mark Thompson, Wire Fraud and Conspiracy, New York NY, 2023 · New York
- Attyx CEOs, $275M Solar Panel Installation Fraud, New York NY, 2023 · New York
MORE FEDERAL CRIME NEWS
US NewsUS NewsUS NewsUS News