RICHMOND, VA – Federal regulators have accused Leonard J. Cipolla and his firm, Tate Street Trading, Inc., of Richmond, Virginia, of running a decade-long fraud that misappropriated over $2.5 million from investors. The U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement action in the Eastern District of Virginia court on Thursday, alleging both fraudulent solicitation and failure to register as required.
According to the CFTC complaint, from June 2009 through April 2019, Cipolla and Tate Street Trading solicited approximately $7,096,303 from at least 42 investors for a commodity pool intended to trade futures and options. However, the agency alleges that roughly $2,506,958 of those funds were diverted for business expenses or personal use. An additional $3,066,827 was allegedly paid to earlier investors in a Ponzi-like fashion, using funds from new investors to satisfy prior obligations.
The complaint details a significant discrepancy between funds collected and funds actually traded. While $7,096,303 was raised from investors, only approximately $1,462,834 was transferred into trading accounts. Despite promising annual returns ranging from 8% to 30%, the defendants’ trading resulted in net losses of approximately $1,462,305 over the ten-year period, with profits only realized in two years.
The CFTC further claims that Cipolla and Tate Street Trading provided misleading statements to investors, failing to accurately report trading results. The agency is seeking restitution for defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, and permanent bans from trading and registration. They also request a permanent injunction to prevent further violations of the Commodity Exchange Act.
The CFTC acknowledged the assistance of the Office of the United States Attorney for the Eastern District of Virginia and the Virginia State Corporation Commission Division of Securities in the investigation. James Garcia, Michael Loconte, and Rick Glaser of the CFTC’s Division of Enforcement are leading the litigation.
Source: CFTC.gov
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